General Banking MTBL

Chapter - 01

INTRODUCTION

Prepared By: Md. Moinuddin, MBA-06. Mkt, C.U 1

EVOLUTION OF THE WORD ‘BANK’

The word bank originated from Italian word “Banca”. Banca means long

tool. In ancient time Italian Jews merchant used to do business of lending

money by sitting on the tools.

It is assumed that the word “bank” derived from the word Banca. To

meet the expense of war of 1171 one type credit certificate was

launched in Italy at an interest rate of 5% it was called as Monte in Italian

language and Banke in German language then German language was

widely used in Italy. As a result the word Banke gradually changed to the

word Banca from which the word Bank originated.

THE EMERGENCE OF MODERN BANKING

The linguistics and etymology suggests an interesting story about

banking origins. Both the old French word “Banque” and the Italian word

Banca were used centuries ago to mean a bench or moneychangers

table. This describes quite well what historian has observed concerning

the first bankers, who lived more than 2000 years ago. They were money

changers, situated usually at table or in a small shop in the commercial

district, aiding travellers who came to town by exchanging foreign coins

for local money or discounting commercial notes for a fee in order to

supply merchants with working capital.

The first bankers probably used their own capital to fund their activities,

but it was not long before the idea of attracting deposit and securing

temporary loans from wealthy customers became a source of bank

funding. Loans were then made to merchant’s shippers and landowners

at rates of interests low as percent per annum to as high as 48 percent a

month for the riskiest ventures! Most of the early bank was Greek in

origin.

The banking industry gradually spread outward from the classical

civilizations of Greece and Rome into northern and western Europe. The

early bank in Europe was places for safe keeping of valuable items (such

as gold and silver bullion) as people came to fear loss of their asset due

to war, theft, or expropriation by government. When colonies were


established in North and South America, old world banking practice was

transferred to the new world.

DEVELOPMENT OF BANK IN BANGLADESH

Bank system was practiced in Indian subcontinent from the ancient

period in Indian subcontinent merchants; goldsmith moneylenders were

the primary bankers. During the mughal period banking and credit

business was enchanted rapidly.

Indigenous banking in Bangladesh is as old as banking in other parts of

the world. Money used to be accepted as a deposit and advances used to

be given. During mughal period, indigenous banking flourished. The

subarna banik the bullion trading community used to do banking in the

then Bengal.

Subsequently, larger banking in Bangladesh was gradually taken over by

the upcountry bankers who were known as Seth, shah etc. but subarna

baniks continued to operate in rural Bengal. With the British gradually

coming over to Bengal and settling here, banking in the form of agency

house, exchanging house started to flourish in Calcutta. Entry of the

Bengalese into banking started in the part of this century, especially in

the wake of the swadeshi movement.

In 1700 AD “Hindustan bank” was established as the first joint stock

bank. In 1784 “Bengal bank” and in 1786 “general bank of India “ was

launched. Then both the bank absolved respectively in 1793 and 1832.

During the early period of nineteenth century the three banks “Bank of

Bombay”, “Bank of madras” and “bank of Bengal” merged to “imperial

bank of India”.

In 1947 after the separation of Bengal, bank business faced a severe

disaster as non-Muslim bankers migrated to India. In order to rebuild the

bank business State bank of Pakistan was established as a central bank

of Pakistan in 1948.


In 1971 Bangladesh became independent. After liberation “Bangladesh

bank was automated with the asset and liabilities of former “State bank

of Pakistan”.


Chapter - 02

COMPANY PROFILE


BACKGROUND OF MTBL

In the backdrop of economic liberalization and financial sector reforms, a

group of highly successful local entrepreneurs conceived an idea of

floating a commercial bank with different outlook. For them, it was

competence, excellence and consistent delivery of reliable service with

superior value products. Accordingly Mutual Trust Bank Ltd. was created

and commencement of business started on September 29, 1999. The

sponsors are reputed personalities in the field of trade and commerce

and their stake ranges from shipping to textile and finance to energy,

etc.

As a fully licensed commercial bank, Mutual Trust Bank Ltd. is being

managed by a highly professional and dedicated team with long

experience in banking. They constantly focus on understanding and

anticipating customer needs. As the banking scenario undergoes

changes so is the bank and it repositions itself in the changed market

condition.

Dhaka Bank Ltd has already made significant progress within a very

short period of its existence. The bank has been graded as a top class

bank in the country. It has already occupied an enviable position among

its competitors after achieving success in most of the areas of business

operation.

The present day banking structure has evolved over several decades.

The far-reaching program of economic reform is being carried out at

present towards efficient utilization of scarce resources and the

development of private entrepreneurship. In a fast changing business

environment, financial intermediaries are gradually being left to be

guided by market forces rather than regulations. Competition is

strengthened by the entry of new and innovative providers of financial

services through the development of money market and the capital

market. Under the ongoing financial liberalization programmed, Mutual


Trust Bank Ltd. emerges as a new bank in the private sector to operate

in the commercial arena of Bangladesh.

Mutual Trust Bank Limited in the Banking Area Of Bangladesh

The banking sector of Bangladesh comprises of four categories of scheduled banks. These are:

Nationalized Commercial Banks Govt. Owned Development-Finance Institutions Private Commercial Banks Foreign Commercial Banks

Commercial banks are again divided into three categories –

First generation Second generation Third generation

MTBL is the leader of third generation bank

GOALS AND OBJECTIVES OF MTBL

To earn and maintain CAMEL Rating 'Strong'

To establish relationship banking and improve service quality

through development of Strategic Marketing Plans

To remain one of the best banks in Bangladesh in terms of

profitability and assets quality.

To introduce fully automated systems through integration of

information technology.

To ensure an adequate rate of return on investment

To keep risk position at an acceptable range (including any off

balance sheet risk)

To maintain adequate liquidity to meet maturing obligations and

commitments.

To maintain a healthy growth of business with desired image.


To maintain adequate control systems and transparency in

procedures.

To develop and retain a quality work force through an effective

HRM system.

To ensure optimum utilization of all available recourses


To be the bank of 1st choice by creating exceptional value for our clients, investors and employees.

We aspire to be the most admired financial institution in the country, recognized as a dynamic, innovative and client focused company, that offers an array of products and services in the search for excellence and to create an impressive economic value.


BOARD OF DIRECTORS OF MTBL

The Board of Directors of Mutual Trust Bank consists of 13 Directors, which includes a Chairman and a Vice Chairman.

Chairman

Mr. Samson H. Chowdhury, Chairman

Mr. Samson H. Chowdhury, a recognized entrepreneur of the country, is

the Chairman of Mutual Trust Bank. This prolific business magnate with

variegated experience is a Senior Cambridge and he participated in the

Management Training Course jointly conducted by the University of

Dhaka and the Harvard University. He has been an icon in the country's

pharmaceutical industry for long. He is the Chairman of the reputed

conglomerate Square. Furthermore, he is the Chairman of Central

Depository Ltd and Shabazpur Tea Estate as well as life member of

Transparency International, Bangladesh Chapter and its former

Chairman.

Vice Chairman

Dr. Arif Dowla , Vice Chairman

Dr. Arif Dowla is the Vice Chairman of Mutual Trust Bank. He is the

Managing Director of Advanced Chemical Industries Limited. He obtained

PhD degree in Mathematics from the University of California, San Diego.

He is also a member of the American Mathematical Society. His doctoral

dissertation was on non-stationary stochastic processes, which is a field

of study related to probability theory and statistics. His thesis advisor

was the renowned Time Series and Random Fields analyst Professor

Dimitris N. Politis.

Directors

Mr. Syed Manzur Elahi (Founder-Chairman)

Mr. Syed Manzur Elahi, Son of late Justice Sir Nasim Ali, former Chief

Justice of Kolkata High Court, was the founder Chairman of Mutual Trust


Bank. He is a man of pleasant personality and enjoys an impeccable

reputation and respect. He has made significant contribution in various

industrial & business enterprises including Banking. He did his M. A. in

Economics from University of Dhaka. Mr. Elahi is the Chairman of

Bangladesh Association of Banks, Vice Chairman, Bangladesh Association

of Publicly Listed Companies and Director of ACI.

Mr. Hedayetullah

Mr. Kh. Rashiduzzaman (Representing East West Properties Development Ltd.)

Al-haj Syed Abul Hossain

Mr. M.A. Maruf

Mr. Md. abdul Malek

Mr. Rashed Ahmed chowdhury

Mrs. Yasmeen haque

Mr. A.F.M Mahfuzul Hasan

Mr. Md. Wakiluddin

Mr. Saidur Rahamn Ratan

Managing Director Of MTBL

Mr. Kazi Md. Shafiqur Rahman

Mr. Kazi Md. Shafiqur Rahman joined Mutual Trust Bank Limited as

Managing Director on 1st May 2007. Earlier he joined Mutual Trust Bank

as Additional Managing Director on February 22, 2007. Mr. Shafiqur

Rahman is an MBA and started banking career as Senior Officer in Janata

Bank in 1973..

Deputy Managing Director

Mr. Quamrul Islam Chowdhury,

Mr. Quamrul Islam Chowdhury, Deputy Managing director, is the

Company Secretary of the Bank. He joined erstwhile State Bank of

Pakistan as Trainee Officer in February 1965 and after completion of

training he was absorbed in the then Habib Bank as Officer. He served in


Habib Bank/ Agrani Bank for 34 years and held important positions. He

was DGM/ Board Secretary of Agrani Bank before he joined Mutual Trust

Bank in September 1999 as Sr. Vice President & Company Secretary.

MANAGEMENT STRUCTURE OF MTBL


MANAGING

DEPUTY MANAGING DIRECTOR

SENIOR EXECUTIVE VICE

EXECUTIVE VICE

SENIOR VICE

VICE

SENIOR ASSISTANT VICE

ASSISTANT VICE PRESIDENT

OFFICER SENIOR PRINCIPAL

PRINCIPAL OFFICER

SENIOR EXECUTIVE

SENIOR OFFICER

JUNIOR OFFICER

OFFICER

ASSISTANT

BRANCH NETWORK OF MTBL

Principal Branch7-8, Motijheel C/A, Dhaka.

Tel : 711 3237-8, 7110930-1

CDA Avenue Branch 565/A, CDA Avenue (GEC Point)

East Nasirabad, Chittagong. Dilkusha Branch

68 Dilkusha C/A, Dhaka 1000Tel : 7171 301- 2 , 7170137

Khatunganj Branch325 Asadganj Road, Chittagong

Tel : 031-61 22 54 , 840718 Panthapath Branch

69/1 Panthapath, Dhaka. Tel : 861 3807, 8629887

Mograpara Branch Mograpara, Sonargaon

Tel : 06723-88105Babu Bazar Branch

Aman Court, 15, Babu Bazar, Dhaka.Tel :731 4821

Sreenagar Branch Sreenagar , Munshigonj

Tel : 06925 88222Progati Sarani Branch

15/5, Progati Sarani, DhakaTel : 881 8804, 885 5863

Aman Bazar Branch Hathazari, Chittagong

Tel : 031-681022Dhanmondi Branch

Green Taj Center Tel : 815 5607, 8158334

Bashundhara City BranchBashundhara City Shopping Mall

Tel : 9124021, 9136113, 8122044Uttara Model Town Branch

Sector 04, Uttara, Dhaka.Phone:8924379, 8951474

Chandra BranchDewan Plaza Kaliakoir, Gazipur

Tel : 06822-51968Pallabi Branch

14/11, Pallabi, Mirpur-12, DhakaTel : 901 6273 , 805 5630

Jubilee Road Branch214 Jubilee Road

Chittagon. Tel : 031-627533Agrabad Branch

21-22, Agrabad C/A,Chaittagong Tel : 031-716 487, 813 287

Nazirhat BranchM.M. Plaza, Fatikchari,Chittagong.

Tel : 0821-4483498Chakoria Branch Chiringa, Chakoria Tel: 0173-108693

Fulbaria BranchAnnexco Tower, Fulbaria, Dhaka.

Tel: 9559842Pabna Branch

Abdul Hamid Road,Dilalpur, PabnaTel: 0174-567109

Madaripur BranchHowlader Harun Plaza, Kotwali,

MadaripurTel: 066162483

Gulshan BranchHouse # 50, Road # 03

Gulshan, Dhaka

Dholaikhal Branch Dholaikhal New Road,Dhaka.

Tel: 7172602, 7172363Sylhet Branch

Sylhet City CenterZindabazar, Sylhet

Raipur BranchGazi Complex,Raipur

LaxmipurMoulvi Bazar Branch

103, M. Saifur Rahman RoadMoulvi Bazar.

Aganagar BranchBabul Tower-2 ,East Aganagar, Dhaka

Phone: 7762226, 7762227Savar Branch

United Super MarketBus Stand,Savar.

Tel: 7741452, 7741453

Joypurhat Branch553 Main RoadJoypurhat Sadar

Joypurhat.


CORPORATE CULTURE

This bank is one of the most disciplined Banks with a distinctive

corporate culture. Here they believe in shared meaning, shared

understanding and shared sense making.The people in the Bank see

themselves as a tight knit team/family that believes in working together

for growth. The corporate culture has developed has not been imposed;

it has rather been achieved through their Corporate conduct.

Corporate Information

The Bank was incorporated on September 29, 1999 under the Companies

Act 1994 as a public company limited by shares for carrying out all kinds

of banking activities with Authorised Capital of Tk. 38,00,000,000 divided

into 38,000,000 ordinary shares of Tk.100 each.

The Company was also issued Certificate for Commencement of Business

on the same day and was granted license on October 05, 1999 by

Bangladesh Bank under the Banking Companies Act 1991 and started its

banking operation on October 24, 1999. As envisaged in the

Memorandum of Association and as licensed by Bangladesh Bank under

the provisions of the Banking Companies Act 1991, the Company started

its banking operation and entitled to carry out the following types of

banking business:

(i) All types of commercial banking activities including Money Market

operations.

(ii) Investment in Merchant Banking activities.

(iii) Investment in Company activities.

(iv) Financiers, Promoters, Capitalists etc.

(v) Financial Intermediary Services.

(vii) Any related Financial Services.


The Company (Bank) operates through its Head Office at Dhaka and 31

branches. The Company/Bank carries out international business through

a Global Network of Foreign Correspondent Banks.

The Registered Office of the Bank is:

68, Dilkusha C/A, Dhaka-1000

Phone: 717 0138, 717 0139, 717 0140 Fax: 880-2-956 9762,

SWIFT-MTBL BD DH ,Telex: 632173 MTB HO BJ

E-mail: [email protected]

Capital Structure

MTBL started its operation on October 24, 1999 as a private sector bank

with an authorized capital of Tk. 1,000.00 million and paid up capital of

Tk. 200.000 million. The authorized capital increased to Tk. 3,800.00

million in 2007. The paid up capital of the bank stood at Tk. 997.92

million as on December 31, 2007 registering an increase of Tk 47.52

million or 5% to that of previous year . Total capital of the bank on

December 31, 2007 increased by Tk. 256.42 million and stood at Tk.

2,370.95 million consisting of shareholders equity(Tire-1) of tk. 1,925.53

million and Supplementary capital(Tire-11) of Tk. 445.42 million.

Shareholders equity consists of paid up capital, reserve and retained

earning whereas Supplementary capital includes general provision

against Loan and advances and exchange equalization and revaluation

gain on HTM securities. Total capital of the bank as on December 31,

2006 was Tk. 2,114.53 million.

Corporate Objectives of MTBL

i) To earn a remarkable income from all heart-center of free economy

ii) To build up a strong pillar of capital

iii) To make the best Bank by offering better services with competitive

price

iv) To offer standard financial service to the people

v) To discover strategies for achieving systematic growth


mailto:[email protected]

vi) To choose the Mutual Trust Bank Ltd. at first time in respect of

offering best service

vii) To enhance asset of the shareholders

viii) To convert standard long term investment by using the Bank’s

silent amount

ix) To produce congenial atmosphere, so that the client becomes

interested to deal in the Mutual trust Bank Ltd.

Corporate Social Responsibility (CSR):

Profits are not the bottom line to Mutual trust Bank Limited. Apart from

earning profits, the bank lays emphasis on the sustainable development

of itself as well as the country, the welfare of the society and the

contribution to the humanity. With this end in view the bank responds to

the clarion call of less privileged and handicapped people. Though the

concept of CSR is nascent in our country, MTB is enlightened with the

spirit of CSR. The bank has contributed to various charitable, educational

and healthcare institutions across the country in the form of donation

and sponsorship. The bank has formed MTB foundation to serve the

humanity. The philanthropic supports were extended both from the bank

and from the MRB foundation.

MTBL FINANCIAL REPORT 2007




OPERATION OF MTBL

Mutual Trust Bank Limited, since its inception is a fully focused Bank

depending on technology. The Bank has by now a network of 30

branches strategically located in different cities. All the branches are

functioning in computerized environment and integrated through Wide

Area Network (WAN). The branches are full-fledged units and can provide

all commercial and investment-banking services raging from small and

medium enterprises to big conglomerates and houses. Sectors like

housing, transport, lease and hire purchase are financed to broaden the

spectrum of loan portfolio. The Bank has been accorded license by the

Securities and Exchange Commission (SEC) for carrying out operation as

merchant banker and portfolio manager. The Bank is expected to start

operation in the areas of issue management, underwriting and portfolio

management. Priority sectors like agriculture and IT are also considered

favorably so as to contribute in the national economy.

The Bank will introduce modern system of Leasing Operation as in

practice with Banks in all other countries of the world. The Lease Finance

portfolio of the Bank will be the first of its kind in a Commercial Bank in

Bangladesh.

A warehousing system will be developed in the country through private

entrepreneurs. The conventional “go down” system of the Banks will

gradually be done away with and modern system of warehousing will be

encouraged in its place for pledge of goods of the clients as in vogue in

all other countries of the world. Because, Banks deal with papers not

with goods.

Mutual Trust Bank Ltd. will try to achieve excellence in customer

services. The customer is most important for them. Their policy will be

customer driven. The Bank will introduce Inland Travelers Cheque and


launch Special Savings Schemes, Special Credit Scheme will also be

devised for the benefit of the low-income group, especially for the self-

employment of the educated youth.

Mutual Trust Bank is primarily a corporate Bank, its loan distribution

being 39% large companies, 35% medium companies and 10% small

companies. In terms of lending type the focus is on in trade finance.

Consumer lending is very small.

Services, Products & Loans Profile OF Mutual Trust Bank

Ltd

Keeping pace up with the head office instruction and to fulfilling the

perfect needs of the customers, the MTBL provides the following

services:

▪ Account Related Services ▪ Personal Banking

▪ Corporate Banking ▪ Capital Market Services

▪ Remittance ▪ Foreign Trade

▪ Correspondent Banking

THE DIFFERENT BANKING SERVICES & PRODUCTS OF

MTBL

Categories of Account Related Services:

▪ Current Account ▪ Savings Account ▪ STD Account

▪ FDR Account ▪ DPS Account ▪ MTB Double Saver

Plan

▪ MTB Triple Saver Plan ▪ MTB Education Plan ▪

MTB Festival Plan

▪ MTB Millionaire Plan ▪ MTB Unique Saving Plan


Categories of Services Under personal Banking:

▪ Personal Loan ▪ SME Loan ▪ ATM / VISA Card

▪ Excel Account ▪ Draft Against DPS ▪ Locker and Safe

custody

▪ Credit Card ▪ Car Loan


Corporate Banking Products:

▪ Letter of Credit ▪ Guarantee ▪ Leasing

▪ Syndicate Loan ▪ Import & Export Finance ▪ Project Financing

▪ Working Capital Financing

Remittance Related Services:

a) Local Remittance:

▪ PO/DD/TT

▪ Collection of PO/DD/TT

▪ Purchase/Discount of cheques-Inland Bill

b) Foreign Remittance:

▪ Encasement of any Foreign TT ▪ Purchase of Foreign

Draft

▪ Collection of clean Bill ▪ Issuance of foreign

currency draft

▪ Cancellation of foreign currency draft ▪ Student file opening

▪ Encasement of any Foreign currency draft

The MTBL Loans Portfolio

Continuous Credit:

▪ Security over ▪ draft Share ▪ Financials obligation ▪ DPS

Cash Credit:

▪ Pledged ▪ Hypothecation

Export Credit Facility:

▪ Packing Credit

Import Credit Facility:


▪ Payment against document (PAD)

▪ Loan against trust receipt (LTR)

▪ Loan Against Imported Materials (LIM)

Industries Loan:

▪ Long term loan ▪ Short term loans

Personal Loan:

▪ Car loa ▪ HBL ▪ Vocational ▪

Educational

▪ Hire purchase ▪Lease financing ▪ Marriage loan

▪ SME Financing:

MTB Digon Loan Scheme

MTB Bhaggobati Loan Scheme

MTB Microfinance Loan Scheme

▪ Consortium financing:

MTB Doctor’s Loan Scheme

MTB Life Line Loan Scheme.


MTBL- JUBLLEE ROAD BRANCH

ORGANOGRAM:

OVERALL POSITION OF PERFORMANCE AS ON DECEMBER 31,

2008 :

Total Deposit :tk. 67,08,13,509

Total Loan & Advances :tk. 72,96,60,923

Total Fixed Assets :tk. 57,64,314

Total Net Income :tk. 10,49,82,446

Total Expenditure :tk. 7,72,68,542

Total Import :tk. 95,89,22,895

Total Export :tk. 37,61,845

Remittance :tk. 74,53,61,827

Profit :tk. 2,77,13,904

ACTIVITIES- JUBLLEE ROAD BRANCH


SAVP& Manager-Mr. Syed Nurul Kabir

Principal officer & Deputy Manager-

Mr. Md. Zahangir Kabir

Sr. Executive officer(SEO)- Mr. Ariful Hoque

Officer (4)

junior officer (2)

Assistant officer (4)

Prepared By: Md. Moinuddin, MBA-06. Mkt, C.U

Customer Care Center

Accounts opening Remittance (Local) Cash

Cash Receipt Cash Payment

Financial Control Department (FCD)

Daily Accounts Clearing

Foreign Exchange Department

ExportImport & Remittance (Foreign)

Loans & Advance Department

Continuous Term Loan

a.CC (Hypothecation)b.Overdraftc.SODd.Cash Collaterale.Loan Againts Trust Receipt (LTR)

Demand

PADInland Bill Purchase (IBP)Foreign Documentary Bill Purchase (FDBP)

Time Loan

25

Chapter-03

GENERAL BANKING

OPERATION


GENERAL BANKING

The starting point of all the banking operations is General Banking. It is

an important department for all banks because it provides services to

the customers day-to-day. Front Desk is the important for general

banking. Customers give their deposits and meet their demand for cash

by honoring cheques. The customer opens new accounts, remit funds,

issues bank drafts and pay orders etc. General banking is also known as

“retail banking”. There are various functions in this department, which

are as follows: -

Account Opening Section/Customer Relation,

Local Remittance Section,

One Stop Utility Services Section,

Deposit Schemes Section,

Clearing Section,

Collection Section,

Cash Section,

Accounts Section,

ACCOUNTS OPENING SECTION

Accounts opening section is an important factor for banks because

customer is the main source of bank. Selection of customer is another

important factor. Bank’s success and failure largely depends on their

customers. If customer is not good then may create fraud and other

problems by their account with bank and thus destroy goodwill of banks.

So, bank must be conscious in selecting its customer. For this reason

keep key information system.


Major Functions:

To open Account

To perform Promotional Activity

To Issue Check & Deposit Book

To Show the statement of different accounts

To provide necessary information to the clients

Types of Account of:

Current Account

Savings Account

Fixed Deposit Account

STD (Short Term Deposit)

SOD (Secured Overdraft)

CC A/C (Cash Credit)

CD A/C (Current Deposit)

Special scheme:

MTB Doctor’s Loan Scheme

MTBL BHAGGOBATI Loan Scheme

MTBL DIGOON Loan Scheme

MTB Life Line Scheme

MTB Microfinance Loan Scheme

MTB Education Plan Scheme

MTB Double Saver Plan Scheme

MTB Monthly Saving Scheme


MTB Visa Electron Card

Procedure to open an Account :

For opening an account, at first the prospective account holder will apply

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

opening form consists of the name of the branch, type of account, name

of the applicant(s), present address, permanent address, passport

number (if any), date of birth, nationality, occupation, nominee(s),

special instruction (if any), initial deposit, specimen signature(s) of the

applicant(s), introducer’s information etc.

The prospective customer should be properly introduced by the

followings:

1. An existing customer of the bank.

2. Officials of the bank not below the rank of Assistant Officer.

3. A respectable person of the locality who is well known to the

manager or authorized officer.

Two copies of passport size photograph duly attested by the

introducer.

Signature of the prospective account holder in the account opening

form and on the specimen signature card duly attested by the

introducer.

Then the concerned authority will allocate a number for the new

account.

The customer than deposit the “initial deposit” by filling up a

deposit slips. Initial deposit to open a current account in is TK.

10000.00 and saving account is Tk. 5000.00.

Activities & papers necessary for opening an account:

A. Joint Account:


If the account is a joint account, then the joint account holder should

submit a declaration and operational instructions of the account along

with their signature. The declaration is:

“Any balance to the credit of the account is and shall be owned

by us as joint depositors. Any liability whatsoever incurred in

respect of this account shall be joint and several.”

B. Partnership firm:

The following documents have to be submitted for preparing an account

of a partnership firm:

1. Partnership deed.

(a) If the partnership firm is a registered one, then one copy of

registration forms.

(b) If not, then a copy of certificate from the notary public.

C. Limited Company:

For the opening of an account of a limited company, following

documents have to be submitted:

A copy of resolution of the company that the company decided to

open an account in the Bank.

Certified true copy of the Memorandum & Articles of Association of

the Company.

Certificate of Incorporation of the company for inspection and

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

Certificate from the Registrar of Joint Stock Companies that the

company is entitled to commence business (in case of Public Ltd.


Co. for inspection and return) along with a duly certified Photocopy

for Bank’s records.

Latest copy of balance sheet.

Extract of Resolution of the Board/General Meeting of the company

for opening the account and authorization for its operation duly

certified by the Chairman/Managing Director of the company.

List of Directors with address (a latest certified copy of Form-XII).

D. Club/Society:

Following documents have to be obtained in case of the account of the

club or society:

a) Up to date list of office bearers.

b) Certified copy of Resolution for opening and operation of account.

c) Certified copy of By-Law and Regulations/Constitution.

d) Copy of Government Approval (if registered).

E. Cooperative Society:

Following documents have to be obtained in case of the account of

Cooperative Society:

a) Copy of by law duly certified by the Co-operative Officer.

b) Up to date list of office bearers.

c) Resolution of the Executive Committee as regard of the account.

d) Certified copy of Certificate of Registration issued by the registrar,

Co-operative societies.

F. Non-Govt. College / School / Madrasha / Muktab:


Following documents have to be obtained in case of the account of non-

govt. college / school / madrasha / muktab:

a) Up to date list of Governing Body/Managing Committee.

b) Copy of Resolution of the Governing Body/Managing Committee

authorizing opening and operation of the account duly certified by

Gazetted Officer.

G. Trustee Board:

a) Following documents have to be obtained in case of the account of

trustee board:

b) Prior approval of the Head Office of .

c) Certified copy of Deed of Trust, up to date list of members of the

Trustee Board and certified copy of the Resolution of Trustee Board

to open and operate the account.

H. Minor’s Account:

Following documents have to be obtained in case of the account of

minor:

a) Putting the word “MINOR” after the title of the account.

b) Recording of the special instruction of operation of the account.

c) The AOF is to be filled in and signed by either the parents or the

legal guardian appointed by the court of law and not by the minor.

LOCAL REMITTANCE SECTION

Functions of remittance Section:

a) Telegraphic Transfer,


b) Demand Draft issue,

c) Saving Certificate Issue (Sanchaypatra issue),

d) Pay order.


Telegraphic Transfer:

It is an order from the issuing branch to the drawee bank / branch for

payment of a certain sum of money to the beneficiary. The payment

instruction is sent by telex and funds are paid to the beneficiary through

his account maintained with the drawee branch or through a pay order if

no account is maintained with the drawee branch.

Procedure of issuing TT:

Following procedures are followed while issuing of TT:

a) The applicant fills up the relevant parts of the prescribed

application form in triplicate, duly signed the same and gives it to

the GB.

b) GB will fill up the commission part for bank’s use and request the

applicant to deposit necessary cash or cheque at the cash booth.

c) The first copy of the application form will be treated as Debit Ticket

while the second copy will be treated as Credit Ticket. The third

copy will be handed over to the applicant as customer’s copy.

d) GB will prepare telex in appropriate form, sign it and send it to the

telex operator for transmission of the message.

e) GB will prepare necessary advice. Debit advice is sent to the client

if client’s account is debited for the amount of T.T.

f) T.T. Confirmation Advice is sent to the drawee branch.

g) Credit Ticket (second copy of the application form) is used to credit

the MTBL General Account.


Accounting Treatment:

For telegraphic transfer, MTBL gives the following entries---

Client’s Account Dr.

MTBL General Account Cr.

Telex Account Cr.

Commission Account Cr.

Payment of T.T.

On receipt of T.T. the drawee branch passes payment instructions the

following entries if the T.T. is found to be correct on verification of the

Test number—

a. MTBL General Account Dr.

DAD Account – TT Payable Cr.

b. DAD Account – TT Payable Dr.

Client’s Account/Pay Order Cr.

In case the beneficiary does not maintain any account with the drawee

branch a pay order will be issued in favor of the payee and sent to his

banker / local address as the case may be.

Every branch maintains a prescribed T.T. Payable Register. All the

particulars off T.T. are to be properly recorded in this register duly

authenticated. A separate Type of T.T. confirmation advice is sent to the

drawee branch on the same day. On receipt of T.T. confirmation advice,

the particulars of T.T. are verified with reference to particulars already

recorded in the T.T. payable register.


Demand Draft (DD) Issue:

Sometimes customers use demand draft for the transfer of money from

one place to another. For getting a demand draft, customer has to fill up

an application form. The form contains date, name and address of the

applicant, signature of the applicant, cheque number (if cheque is given

for issuing the DD), draft number, name of the payee, name of the

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

form will be duly signed by the applicant and by the authorized

officer. MTBL charges 15% commission on the face value of DD as

service charge.

Process of issuing Local Draft:

Following procedures are followed while issuing local draft—

a) Get the application form properly filled up and signed by the

applicant.

b) Complete the lower portion of the form for the bank’s use.

c) Calculate the total amount including the bank’s commission.

d) If the cheque is presented for of the local draft, the officer

should get the cheque duly passed for payment by the authorized

person and record the particulars of local draft on the back of the

cheque.

e) If the client wants to debit his account for the payment of the

draft amount, the officer should get the account holder’s signature

verified properly, from signature card on record of the branch and

debit clients account for the total amount including commission.

f) The first copy of the application form will be treated as Debit

Ticket while the second copy will be treated as Credit Ticket and

kept by the GB. The third copy is handed over to the applicant as

customer’s copy.


The GB Department maintains a prescribed L.D. Issue Register. All the

required particulars of LDs issued by MTBL should be entered in that

register duly authenticated.

Issue of Duplicate Draft:

Before issuing duplicate L.D. the branch should observe the followings—

a) Verify the purchaser’s signature on the request letter from the

signature appearing on the original application form.

b) Immediately issue a stop payment instruction to the drawee

branch under advice of head office and obtain confirmation of non-

payment the L.D. in acquisition.

c) After the drawee branch has acknowledged the stop payment

order and confirmed that the local draft in acquisition remains

unpaid at their end, the issuing branch should obtain an Indemnity

Bond on stamp paper as per prescribed format from the purchaser

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

for their approval to issue a duplicate draft.

d) The head office on receipt of the request from the issuing branch

will immediately issue a caution circular to all the branches

regarding the lost of the local draft asking them to record stop

payment.

e) The head office will thereafter issue clearance to the issuing

branch for issuing for issuing a duplicate draft in lieu of original

reported lost.

f) On receipt of the clearance from head office, the issuing branch

will issue a completely fresh draft marking clearly the words

duplicate issued in lieu of original draft no………………. dated

…………….in bold letters on the top of the front page of the draft.

The printed serial number on the draft should not however be struck

off. Intimation should be given to the drawee branch furnishing full

particulars of the duplicate draft.


g) The particulars of the duplicate draft must resemble those of the

original draft in all respects, i.e., all the particulars to the duplicate

draft must be identical with those in the original draft. No further

IBCA is to be issued for the duplicate draft.

h) Prescribed duplicate issuance charge is to be recovered for issuing

the duplicate draft and credited to “Income Account”.

Cancellation of Local Draft:

The followings are followed while canceling a L.D.—

a) The purchaser should submit a written request for cancellation of

the L.D. attaching therewith the original L.D.

b) The signature of the purchaser will have to be verified from the

original application form.

c) Manager’s prior permission is to be obtained before refunding the

amount of draft.

d) Cancellation charge is to be recovered from the applicant and only

the amount of the draft less cancellation charge should be

refunded. Commission charge, posted charge etc. recovered for

issuing the L.D. should not be refunded.

e) The original entries are to be reversed giving proper narration. An

IBDA for the cancelled L.D. should be issued on the drawee branch.

f) Cancellation of L.D. should also be recorded in the L.D. Issue

Register.

Payment of L.D.:

While payment of L.D. MTBL performs the following functions—

a. On receipt of Credit Advice (IBCA) from the issuing branch the

following entries are to be passed –

MTBL General Account Dr.

DAD Account Cr.


b. When L.D. is presented for payment at the paying branch, its

details are to be carefully examined with reference to the following

points—

1) Whether the draft is drawn on the Local office.

2) Whether the draft is crossed or not. Amount of crossed

draft is not paid in cash to the payee but to be paid to his account

with a bank.


3) Draft must have to be signed by two authorized

officers of the issuing branch. Their signatures are to be verified

from the specimen signature book for being sure that draft that the

draft is genuine. The verifier should put his initial.

4) Endorsement on the back of the draft must be regular

in case the draft is presented through clearing.

5) The amount of the draft should not exceed the amount

written in red ink at the top of the draft.

6) The payee is to be properly identified in case of cash

payment.

7) The particulars of the draft i.e. the draft number, date,

amount and the name of the payee should be verified from the L.D.

Payable Register.

8) In case of payment, the draft should be cancelled with

red ink. The date of payment should be recorded in the L.D.

Payable Register.


While payment:

DAD –L.D. Payable Account Dr.

Client’s Account Cr.

An IBCA should be sent with this.

Stop payment of Local Draft:

The payee or purchaser of the draft cannot give stop payment instruction

to the drawee branch. If the paying branch receives a request from the

purchaser of the draft for stopping payment of the draft, it will ask the

purchaser to approach the issuing branch about the purpose. The paying

branch should however exercise necessary precaution in this regard.

Only the issuing branch can issue instruction for stop payment of the

draft under special circumstances.

Saving Certificates:


MTBL Jubllee Road branch sales shanchaya patra as its ancillary services

rendered to customers on behalf of govt. Through Bangladesh bank. Jatio

Shanchay Bureau guided by Bangladesh bank issues Shanchaya patra.

Shanchaya Patra:

Shanchaya patra is received from Bangladesh bank (BB). People

purchasing these bonds by depositing money in this branch and payment

are made on maturity to customers from this branch only. Every

transaction is reported to Bangladesh bank. In case of issuance, report to

be reached to BB within 48 hours, otherwise penalty is imposed. Money

is realized from BB after making payment to customer.

Pay Order:

For issuing a pay order, the client is to submit an application to GB in the

prescribed form. This form should be properly filled up and signed. The

procedure of the issuing pay order is similar to that of the Local Draft.

For issuing pay order MTBL charges commission on the following rate—

# For Tk. 1 to 100000, the commission is Tk.25.

# For Tk. 100000 to 500000, the commission s Tk. 60.

# For Tk 500000 to above, the commission is TK. 75.

Payment of Pay Order:

The pay order is presented to the bank either through clearance or for

credit to the client’s account. While payment, relative entry is given in

the pay order register with the date of payment.

Cancellation of Pay Order:

The following procedure should be followed for the cancellation of the

pay order:

i) The client should submit a written request for canceling the pay

order attaching therewith the original pay order.

ii) The signature of the purchaser will have to be verified from the

original application form.


iii) Manager’s prior permission is to be obtained before refunding the

amount of the pay order.

iv) Cancellation charge is to be recovered from the applicant and only

the amount of the pay order less cancellation charge should be

refunded. Commission recorded for issuing of the original pay

order should not be refunded.

v) Then the officer should write, “Cancelled” on the pay order.

vi) The original entries should be reversed with narration.

vii) Cancellation of the pay order should also be recorded in the

register.


While issuing pay order, MTBL gives the following entries ---

Client’s Account Dr.

Pay Order Cr.

Commission Cr.

CLEARING SECTION

According to the Article 37(2) of Bangladesh Bank Order, 1972,the

banks, which are the member of clearinghouse, are called as Scheduled

Banks. The scheduled banks clear the check drawn upon one another

through the clearinghouse. This is an arrangement by the central bank

where everyday the representative of the member banks gathers to

clear the chouse. Banks for credit of the proceeds to the customers’

accounts accept check and other similar instruments. The bank receives

many such instruments during the day from account holders. Many of

these instruments are drawn payable at other banks. If they were to be

presented at the drawee banks to collect the proceeds, it would be

necessary to employ many messengers for the purpose. Similarly, there

would be many check drawn on this the messengers of other banks

would present bank and them at the counter. The whole process of

collection and payment would involve considerable labor, delay, risk and

expenditure.


Clearing:

As far as safety is concerned customers get crossed cheque for the

transaction. As we know crossed cheque cannot be encased from the

counter, rather it has to be collected through banking channel i.e.

clearing. For example, a client of Mutual Trust Bank received a cheque of

another bank, which is located within the clearing range; deposit the

cheque in his account at Mutual Trust Bank. Now Mutual Trust Bank will

credit his account and collect it. Though the amount is credited in the

customers account but he will not get the money until the cheque is

honored.

Types Of Clearing:

1. Outward Clearing:

Outward clearing means when a particular branch receives instrument

drawn on the other bank within the clearing zone and those instruments

for collection through the clearing arrangement is considered as outward

clearing for that particular branch.

2. Inward Clearing:

When a particular branch receives instruments, which on them and sent

by other member bank for collections are treated as inward clearing.

Clearing house

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

come to settle their interrelated liabilities.

Clearing House System

The 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.

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.

Activities of the Section:

(a) Preparation of Clearing Outward and Inward Lodgment and record

maintenance of the same.

(b) Batch posting as and when required.

On receipt of instruments, the same is endorsed here. Then clearing

section will sent IBDA to head Office for clearing purpose and on receipt

of IBCA from Head Office amount is credited to customers account and

vice versa. If the instrument is return then the same is given back to the

customer.

Accounting Entries:

For inward instruments:

Customer A/C ----------------------------------Debit

MTBL General A/C ---------------------------Credit

Incase of return:

MTBL General A/C ------------------------Debit

Customers A/C -----------------------------Credit

For Outward instruments:

MTBL General A/C -------------------------Debit


Customers A/C -------------------------------Credit.

In case of return:

Customer A/C --------------------------------Debit

MTBL General A/C---------------------------Credit.

Outward Bills for Collection (OBC):

Customers deposit cheque, drafts etc. for collection, attaching their

deposit slip. Instruments within the range of clearing are collected

through local clearinghouse. But the other, which is outside the clearing

range, is collected through OBC. A customer of Mutual Trust Bank,

Jubllee Road Branch, is depositing a cheque of Sonali Bank, Dhanmondi

Branch. As a collecting bank Mutual Trust Bank Jubllee Road Branch

sends IBCA along with cheque to Mutual Trust Bank, Principal Branch.

Mutual Trust Bank, Main Branch will collect it by Jaamuna Bank,

Dhanmondi Branch, the agent. They will forward the bill to that particular

(Dhanmondi) branch. OBC number given the on the forwarding letter.

Inward Bills For Collection (IBC):

In this case bank will work as an agent of the collection bank. The branch

receives a forwarding letter and the bill. Next steps are:

Entry in the IBC register, an IBC number given.

The instrument is sent to clearing for collection.

An IBC is dispatched in this regard.

If dishonored > in this case the instrument is returned to the collecting

branch along with return Memo indicating the cause of dishonored.


ACCOUNTS DEPARTMENT

Introduction:

Accounts division is the center of a bank. As all transactions carried by a

bank is being legalized as far as accounting is concerned. If transactions

were not recorded properly there would be dis-equilibrium in state of the

bank. There can be imbalance in the cashbook thus the whole

mechanism will collapse.

The regular tasks of department are:

To record all transactions in the cashbook.

To prepare daily fund position, weekly position, periodic statement of

affairs.

Prepare necessary statements for reporting purpose.

To pay all expenditures on behalf of the branch.

Make salary statements and pay salary.

Branch to branch fund remittance and supporting accounting

treatment.

Prepare statements for customer.

Publishing basic data of the branch etc.

General practices of an Accounts Department:

Scrutinizing Vouchers:

At the day end all vouchers are sent to the accounts department by the

respective department from where vouchers are originated. On the next

day an `activity report’ is received from computer department. The

activity report is the detail statement of all the transactions carried by

the branch of a particular date. It is the summary of all account position.

It also displays cash, clearing, transfer position, individual deposit

account position etc.


Provisioning:

Accounts department make provision for different deposit accounts.

Provisioning means keeping the record of expense, which has occurred

by non-cash way. This department also made depreciation of assets that

is one kind of non-cash expense.

CASH SECTION

There are various systems maintain by cash officer that is under:

Vault

Cash Payment

Cash Receive

Transaction after banking hour.

The cash department is the riskiest department of the bank. This is the

section where tight security is required to avoid any accidents. There is a

limit to be amount of cash that each counter can carry; carrying of

excess cash is avoided for safety reasons.

Cash Receipt:

When clients deposit cash in the bank, the bank officer on receipt of the

cash and the pay in slip/credit voucher shall:

Check and count the received cash.

Make sure that the amount in word and number in the deposit slip are

same.

Check the account title and the number.

Both the deposit slip is in order.

Depositor’s signature is in the slip.

Receive seal in the slip is a must.

Write the domination of the currency at the back of the pay in slip or

the credit voucher and affix stamp in the slip/voucher.


Enter particulars of in slip/credit voucher in the receiving cash officer

book.

At least, send the pay in slip/voucher to the deposit department or to

the respective department.

The respective officer must sign deposit slip.

Carbon copy of the deposit slip must be handover to the client with

proper seal and signature.

Cash Payment :

Cheques, demand drafts, pay orders, pay slips and debit cash vouchers

etc. are received from various departments for payment of cash to

customers/payees.Prior payment of cash it is the officer’s duty to make

sure that the cheque/or the instrument has been genuinely passed. The

following common precaution is thoroughly practiced before honoring a

cheque:

Check of it is an open or crossed check.

The branch name in the cheque.

The date in the cheque is very crucial. Cheques are normally valid six

months and pre-dated cheques are asked to present after the date

given.

Tk in words and figure of the cheque is same.

Balance in the account is available.

The apparent tenor of the cheque. Whether any figure, date or

anything has been altered in the cheque presented. If any, then the

respective officer must check wheteher the client is making his

signature for alteration or not.

The specimen card signature and signature in the cheque should

match.

Signature of recipient is obtained on the reverse of cheque.

In case, where a prior arrangement has been made with the bank, a

client may overdraw against a cheque.



Books maintained by cash department :

Vault Register:

This book where amount of cash available in the branch is maintained.

That is, the amount in the vault register book.

Cash Receive Register:

This register keeps record of all incoming cash.

Cash Payment Register:

Similar to the cash register book, this book keeps tracks of all outgoing

cash that is all payments.

Daily Cash Balance Register:

This is the book where cash balance is recorded by counting the notes

and coins that are physically available. The balance in this book is

compare with the vault register, which should be the same. In case there

is an error, then the figures would not match but if no discrepancy is

found then anything is to be worried about.

Mail Receive and Dispatch Section:

Banking is the business of correspondence. Lot of mail comes to the

bank and dispatch from the branch daily. Lot of mail document causes

much loss for bank. That is why bank has to record all Mail received and

dispatched through the bank.

Mail receiving:

All mail comes to the bank recorded in this desk. For this reason a

register book maintained called inward mail register. A number is given

on receiving mail and records particulars of document in the register

book.

Mail Dispatching:

Before dispatching mail from the bank must record in outward mail

register. A number is given on the mail. Destinations, date of dispatch

are recorded in that register


Chapter-04

SERVICE OFFERED BY CREDIT

DEPARTMENT


CREDIT MANAGEMENT

Credit management is the part of bank management which decides what

type of lending product will be offered, to whom it will be offered, how

much it will be offered and analyze and measure the credit risk on loans

and manage all the activities regarding the loans. The aim of the credit

management is to have a secured loan portfolio so that the bank can

earn profit by keeping the depositors savings secured. The entire job

regarding that consist the credit management.

LOAN

Loan means lending a fixed amount of money to borrower for a certain

period time. The borrower must repay the loan within the given time

period. In Loan, the disbursement will take place only for one time. The

borrower can repay the loan all at a time or by installment.

ADVANCE

Advance is a little bit different than Loan. In Advance, the borrower is

allowed credit limit for a given period of time. In that given period, the

borrower can withdraw money, as many times as he want but he cannot

exceed the credit limit. Again he can repay several times whenever he

wants. In Advance, disbursement and repayment occurs several times.

But at the end of the period, whole credit amount must be repaid to the

banks. This type of credit is allowed to business for their working capital

requirement.

PAPERS/DOCUMENTS REQUIRED FOR LOAN &

ADVANCES

Original Title Deeds

R.S.Khatian/ P.S.Khatian / B.S.Khatian


R.S., P.S., &B.S.Sheet or Information Slip regarding corresponding

plots

B.S. Mutation Khatian, DCR & CC Of Order Sheet of Mutation case

Vendor Deeds (Bia Deed)

Up-to- date rent receipt

Up to Non Encumbrance certificate

Municipal Holding Tax Receipt

CDA approved plan

Mortgage permission

No objection certificate From Third party

All original deeds & documents

Trade license

TIN Certificate

VAT certificate

IRC/ERC

L/C Performance for last 01 year

Liability With other bank (sanction letter)

Nationality Certificate

Two copies passport size photographs

Clients Letter Pad

Account statement of recent year with cash flow & Income

statement

Bank statement of the existing Banks

Stock report

EXISTING CREDIT POLICY OF MTBL LTD

Mutual Trust Bank Ltd. is a new bank. It is committed to provide high

quality financial services/products to contribute to the growth of GDP of

the country through stimulating trade and commerce, accelerating the

pace of industrialization, boosting up export, creating employment

opportunity for the educated youth, poverty alleviation, raising standard

of living of limited income group and overall sustainable socio-economic

development of the country.


In achieving the aforesaid objectives of the bank, Credit Operation bank

is of paramount importance as the greatest share of total revenue of the

bank is generated from it, maximum risk is centered in it and even the

very existence of the bank depends on prudent management of its credit

port-folio and is less often the result shrinkage in the value of other

assets. As such, credit portfolio not only features dominant in the assets

structure of the bank, it is critically important to the success of the bank

also.

To provide a broad guide line for the Credit operation towards achieving

the objectives of the bank, for efficient and profitable deployment of its

mobilized resources and to administer the Credit portfolio in the most

efficient way, a clearly defined, well planed, comprehensive and

appropriate Credit Policy and control guidelines of the bank is a pre-

requisite.

The administration of the loan process covers all laws and regulations at

both local and global levels including Bank Policy as set out in this

documents and The Bank's Credit manual / circulars.

Proper analysis of credit proposal is complex and requires a high level of

numerical as well as analytical ability. To ensure effective understanding

of the concepts and thus to make the overall credit portfolio of the bank

healthy, proper staffing of the credit departments done through

placement of qualified officials who have got the right aptitude, formal

training in finance, credit risk analysis, bank credit procedures as well as

required experience. Where repayment and interest servicing

performance of a credit deteriorates in it is identified at an early state

and closely monitored in order to avoid loan losses.

Types of Credit Facilities:

Mutual Trust Bank Ltd. ltd provides the following types of credit facilities

to the individuals, partnership firms, companies, corporations and other:

Term Loan


Temporary Over draft

Overdraft against securities

Loan Against Packing Credit

Cash credit

Payment Against Documents

Loan Against Trust receipt

Foreign Bills Purchased (clean)

Foreign Bills Purchased (Documentary)

Local bill Purchased (clean)

Local Bills Purchased (Documentary)

Foreign Bills Discounted

Local Bills Discounted

Other Bank’s Acceptance Purchased

Demand loans

Staff loans

Figure: credit facilities of MTBL.


FUNDED CREDIT FACILITY

NON-FUNDED CREDIT FACILITY

Letter of Credit (L/C)

Letter of Guarantee

Over Draft (OD)

Cash Credit(CC)

Term Loan

SOD(P)

SOD(H) CCPledge

CCHypothecation

CREDIT FACILITIES PROVIDED BY THE MTBL.

SME & CONSUMER FINANCING OF MTBL

MTB has formulated and launched a number of products under Small

Enterprise Financing & Consumer Financing program in accordance with

the prudential Regulation/Guidelines of Bangladesh Bank. The products

are Small business Loan, Consumer Loan, Home Loan, Home Repair &

Renovation and Auto Loan. These products are now dealt with SME

Division of the bank as SME loan products.


SME & Consumer Financing:

a. MTB Doctor’s Loan Scheme

b. MTB Bhaggobati Loan Scheme

c. MTB Digon Loan Scheme

d. MTB Life Line Loan Scheme

e. MTB Microfinance Loan Scheme

(a) MTB Doctor’s Loan Scheme:

Now to diversify the bank’s product as well as make profitability, the

bank may introduce new product for lending in the potential sectors of

the consumer market. Doctors Loan is now a demanding and lucrative

product. Most of the private commercial banks such as Prime Bank

Limited, Eastern Bank Limited, BRAC Bank Limited, Trust Bank Limited

etc have product for financing the doctors.

(b).MTBL BHAGGOBATI Loan Scheme:

Women are no more belong for household activities only. Rather their

movement started

shifting toward ruling nation, leading corporate office, developing as

business think tank. In all over the world for the last decade women has

proved their capacity and entrepreneurship skill in their respective

arena. The state and Bangladesh Bank feel to give a comfortable ground

for the development of the women in the business entity and are

encouraging and inviting the financial facilitators to extend their hands.

There are thousands women specially in handcrafts, boutique, agro

based industry, beauty parlor, readymade garments, creative works,

interior design, entertainment market etc keeping their superb

contribution and emerging gradually. It is the right time for us to develop

a product for the development of women entrepreneur, which will have

long-term impact on the growth of our economy.


(c) MTBL DIGOON Loan Scheme:

There are around 120,000 bankable small and medium enterprises

(SMEs) in Bangladesh according to market survey. Based on the

estimate, there is a total funding requirements of BDT 200 Billion. A lot of

banks are financing for their working capital, fixed asset purchase and

other business purpose through complicated or less friendly credit

analysis methods by taking land and / or building as primary collateral.

MTBL, as specified in its Small & medium Enterprise Financing Policy,

would like to offer simply structured, process based, yet risk mitigating

banking product to the SMEs. MTB “DIGOON” has been designed based

on the above objectives to achieve

(d)MTB Life Line Scheme:

MTB Life Line is an any purpose unsecured and terminating loan facility

(EMI based) for any legitimate purpose. Bank would finance against gross

monthly income of the any credit worthy individual. To meet life style

needs of the credit worthy individuals and to capitalize the vast market

gap, this loan is a suitable unsecured consumer loan product.

(e)MTB Microfinance Loan Scheme:

Micro finance loan is now a demanding and lucrative product. Most of the

Nationalized Commercial Banks (NCBs), Private commercial Banks (PCBs)

and also the Foreign Commercial Banks (FCBs) are lending the micro

finance institutions (MFIs) as wholesale credit under specific product

program. The product as proposed for microfinance lending under

Microfinance Scheme may be dealt with SME Division as specialized

product.


FUNCTIONS OF CREDIT DEPARTMENT

The responsibilities/ functions perform by the credit department for

processing and servicing of all types of advances as well as maintaining

the records are as follows:

The Branch Managers is the first line-lending officers and are

responsible for exercising their authority with due diligence and

discipline. They must also:

Know their borrower fully

Comply with the applicable instructions, manual, circulars

and other rules of the bank as well as those of Bangladesh

Bank including Banking companies Act 1991 (as mentioned

from time to time).

Take interview of the prospective borrower.

Receive the credit information assembled and placed in the

Customer's Credit file.

Process and sanction credits to the customers.

Disburse credit facilities to borrowers in accordance with

established procedures.

Record the credit facilities.

Prepare vouchers pertaining to credit facilities disbursed and

maintain records of relevant entries.

Control the securities and proper customer of documents.

Follow up the recovery of credit as per due date.

Review and analyze the following in connection with credit

risk proposals covering any obligor.

History of antecedent of the obligor and its management

personnel.

Financial condition of the obligor evidenced by comparative

statements like Balance Sheet, Income Statement, operation results -

and supplementary facts as well as by personal Net Worth Statement

of the proprietor, parents and directors.


Bank and Credit Information Bureau (CIB) checking and trade

standing through investigation.

CREDIT INFORMATION BUREAU (CIB) REPORT

Credit information bureau is a department of Bangladesh Bank, which

provide report on the prospective client of loan. If the applicant is

defaulter at any Bank than Bangladesh Bank restrict that particular

client. Therefore, CIB Report plays an important function in giving loan

and advances.

The following flow chart shows the process of getting CIB

Report.

Figure: Process of getting CIB Report

CIB Report is required in the following three fields:

New loan

Renewal

Enhance

Five Inquiry Forms have to produce by the bank to get CIB Report. These

are:

SEGMENT 1: Information of individual/organization/institution


INQUIRY FORM HEAD OFFICE

CIB REPORT BANGLADESH BANKREPORT

SEGMENT 2: owner information

SEGMENT 3: Information of allied concern

SEGMENT 4: Outstanding information

SEGMENT 5: Guarantor information

Chapter -05

FOREIGN EXCHANGE

DEPARTMENT


FOREIGN EXCHANGE

Foreign Exchange Department is international department of Bank. It

deals globally. It facilitates international trade through its various modes

of services. It bridges between importers and exporters. If the branch is

authorized dealer exchange market, it can remit foreign exchange form

local country to foreign country. This department mainly deals in foreign

currency. This is why this department is called foreign exchange

department.

Some national and international laws regulate function of this

department. Among these Foreign Exchange Act, 1947 is for dealing in

foreign exchange business, and Import and Export Control Act, 1950 is

for Documentary Credits (UCPDC-1993 revision & International Chamber

of Commerce Publication no-500) is also an international trade.

Governments Import & Export policy is another important factors for

import and export operation for banks.


Foreign Exchange Mechanism


BUYER/IMPORTER SELLER/

EXPORTER/BENEFICIARY

ISSUING BANKL/C OPENNING BANK

ADVISING BANKCONFIRMING BANKNEGOTIATING BANK

PAYING / REIMBURSING BANK

INDENTOR

Issuing L/C

Forwards Documents

Makes payment

Sales/ purchase Contract

Mak

es P

aym

ent

Pre

sen

t d

ocu

men

ts

Pay

or

Rei

mbu

rses

Instructs to pay or reim

burse

Ap

plication

for open

ing L

/C

Mak

es Paym

ent

against d

ocum

ents

Su

bm

its docu

men

ts

Ad

vise

s or

con

firm

s L

/C

Functions of This Department


Foreign Exchange

Imports

Opening of L/C

Loan against Imported Merchandise (LIM)

Payment against

Document (PAD)

Exports

Loan against Trust Receipt

Export L/C Advising Pre-Shipment Finance

Post-Shipment Finance

Foreign Bills for Collection (FBC)

Inward Bills(For Collection)

Guarantees Inland & Foreign Export Certificates Realization

Dealing Section

Quoting Rates of Exchange

Remittance

Forward Cover (Booking of Contract)

Inward Remittance

Purchase or encashment foreign currencies & TC

Out ward Remittance FDD, MT, TT

Reconciliation (Foreign Bank A/c)

Guidance on rates trends to customer

Returns

Issue & Sales of Foreign currencies &

TC

Travel

Other Rectums HO (IBD)

Rectums to Bangladesh Bank

IMPORT OPERATION

Import section helps business and other people to import goods. In

international environment, buyers and sellers are often unknown to each

other. So seller always seek guarantee for the payment for his goods

exported. Here is the role of bank. Bank gives export guarantee that it

will pay for the goods on behalf of the buyer. This guarantee is called

Letter of Credit. Thus the contract between importer and exporter is

given a legal shape by the banker by its ‘Letter of Credit’.

When a buyer goes to import some goods from a foreign buyer, he

requests his bank make payments to the exporter of goods. And the

bank recovers the amount from the importer.

Steps for Import L/C Operation- (6 Steps Operation):

Step 1-Registration with CCI&E

1. For engaging in international trade, every trader must be first

registered with the Chief Controller of Import and Export.

2. By paying specified registration fees to the CCI&E. the trader will

get IRC/ERC (Import/Export Registration Certificate), to open L/C with

bank, this IRC is must.

Step 2-Determination terms of credit

1. The terms of the letter of credit are depending upon the contract

between the importer and exporter. The terms of the credit specify the

amount of credit, name and address of the beneficiary and opener, tenor

of the bill of exchange, period and mode of shipment and of destination,

nature of credit, expiry date, name and number of sets of shipping

documents etc.


Step 3-Application by importer to the banker to open letter of

credit

1. For opening L/C, the importer is required to fill up a prescribed

application form provided by the banker along with the following

documents

1. Pro-forma invoice

2. Demand Promissory Note

3. Authority to debit account

4. Tax Information Certificate

5. Filled up amendment request from

6. IMP form

7. Insurance cover note, etc.

8. Filled up LCA form

Step 4- Opening of L/C by the bank for the opener

1. Taking filled up application form the importer

2. Collects credit report of exporter from exporter’s country

through his foreign correspondence there.

3. Opening bank then issues credit by air mail or cable followed by

credit advice as asked for by the opener through his foreign

correspondent or branch as the cash may be, at the place of beneficiary.

The advising bank advises the credit to the beneficiary on his own form

where it is addressed to him or merely hands on the original credit to the

beneficiary if it is so addressed.

Step 5-Shiment of goods and submission of documents by

exporter

1. Then exporter ships the goods to the destination of the importer

country

2. Sends the documents to the L/C opening bank through his

negotiating bank. Generally the following documents are sent to the

Opening Banker with L/C:

1. Bill of Exchange


2. Bill of Lading

3. Commercial Invoice

4. Certification of Origin

5. A certificate stating that each packet contains the description of goods

over the packet.

6. Packing List

7. Advice Details of Shipment

8. Pre-shipment Inspection Certificate

9. Vessel Particular

Step 6-Lodgment of Documents by the opening Bank from the

negotiating bank

1. After receiver the documents, the opening banker scrutinizes the

documents. If any discrepancy found, it informs the importer. If importer

accepts the fault, then opening banker call importer retiring the

document. At this time many thing can happen. These are indicated in

the following:

Discrepancy found but the importer accepts-no problem occurs in

lodgment.

Discrepancy found and importer not agreed to accept- in this case,

importer protest and send back all the documents to the exporter and

request his to make in the specified manner. Here banker is not bound to

pay because the documents send by exporter is not in accordance with

the terms of L/C.

Documents are OK but importer is willing to retire the documents-In this

cash bank is obligated to pay the price of exported goods. Since importer

did not pay bill of exchange, this payment b bank is one kind of credit to

the importer and this credit in banking is known as FORCED PAD.

Everything is O.K. but importer fails to clear goods from the port and

request bank to clear in this cash banks clear the goods and takes


delivery of the same by paying customs duty and sales tax etc. So, this

expenditure is debited to the importer’s account and in banking it is

called LIM.


EXPORT OPERATION

Bangladesh exports a large quantity of goods and services to foreign

households. Readymade textile garments (both knitted and woven), Jute,

Jute-made products, frozen countries. Garments sector is the largest

sector that exports the lion share of the country’s export. Bangladesh

exports most of its readymade garment products to U.S.A and European

community (EC) countries. Bangladesh exports about 40% of its

readymade garments products to U.S.A. Most of the exporters who

export through MTBL are readymade garment exporters. They open

export L/Cs here to export their goods, which they open against the

import L/Cs opened by their foreign importers.

Export L/C operation is just reverse of the import L/C operation. For

exporting goods by the local exporter, bank may act as advising banks

and collecting bank (negotiable bank) for the exporter.

A. As an advising Bank

It receives documents from the foreign importer and hands it over to the

exporter. Sometimes it adds confirmation on the L/C on request from the

Opening Bank. By adding confirmation, it assumes the responsibility to

make payment to the exporter.

B. As Negotiating Bank

It negotiates the bills and other shipping documents in favor of the

exporter. That is it collects the proceeds of the export-bill from the

drawer and credits the exporter’s account for the same. Collection

proceed from the export bill is deposited in the bank’s NOSTRO account

in the importer’s country. Sometimes the bank purchases the bills at

discount and waits till maturity of the bill. When the bill matures,

natures, bank presents it to the drawee to encash it.


Chapter -06

COMPARATIVE ANALYSIS


COMPARATIVE ANALYSIS AMONG FIVE 3 RD GENERATION BANK

I compare the competitive position of MTBL with other five modern Banks

on the basis of following financial terms by Taking 2006 as base year &

2007 as current year on the basis of growth rate:

Deposits In million Taka

Name

Year

B. ASIA ONE

B.

D.B.B.L

.

J.B.L TRUST B. M.T.B.L

2003 10431.38 8847 17133.81 6614.06 4483.26 7163.67

2004 13470.98 10915 21067.56 10450.16 9314.95 13164.13

2005 18500.07 18030 27241.11 14454.13 12704.90 16098.54

2006 25289.36 20253 40111.54 17284.81

1

18985.95 22264.05

2007 30004.09 24484 42110.15 20924.02 27101.59 24776.92

Investments: In Million Taka

Name

Year

B. ASIA ONE

B.

D.B.B.L

.

J.B.L TRUST B. M.T.B.L

2003 2496.69 688 3880.03 935.48 1896.92 996.06

2004 3240.51 1229 4372.14 1163.70 3220.78 1676.21

2005 2256.28 2165 4992.13 2037.84 2447.95 2495.98

2006 3345.33 3321 5876.52 2552.67 3122.81 2821.62

2007 4211.35 3587 5909.32 5390.032 3785.45 3956.53

Loans & Advances: In

Million Taka

Name

Year

B. ASIA ONE

B.

D.B.B.L

.

J.B.L TRUST B. M.T.B.

L

2003 8189.82 6051 11431.32 3239.52 4358.31 5904.18

2004 11861.19 9613 15927.23 6722.80 6804.45 11692.9

7

2005 17869.84 13851 22592.27 11011.83 9738.32 14373.2

6

2006 22255.64 15681 30456.32 12796.63 13188.09 18591.5


2

2007 28456.94 19709 29403.12 16617.45 18682.16 22683.2

3


ROI: In Million Taka

Name

Year

B. ASIA ONE

B.

D.B.B.L

.


L

2003 5.19 13.22 8.84 3.69 3.59 11.29

2004 6.26 15.86 6.22 4.68 5.46 14.74

2005 9.15 13.94 5.87 2.93 4.95 13.80

2006 7.45 12.86 7.30 10.02 8.43 8.50

2007 11.09 13.05 5.33 10.68 8.80 6.31

EPS: In Million

Taka

Name

Year

B. ASIA ONE

B.

D.B.B.L

.


L

2003 - 23.44 103.97 14.25 19.47 43.37

2004 18.53 24.10 116.93 36.35 35.20 34.33

2005 11.82 37.46 181.97 46.58 24.26 35.37

2006 10.04 39.06 170.18 31.94 52.63 47.93

2007 11.03 38.97 237.37 8.04 28.28 21.12

NET PROFIT: In Million

Taka

Name

Year

B. ASIA ONE

B.

D.B.B.L

.


L

2003 215.85 91 210.15 61.14 68.14 190.34

2004 293.74 195 236.35 155.95 175.98 247.19

2005 383.51 302 367.82 199.82 121.29 336.17

2006 475.75 347 362.18 253.40 263.16 478.28

2007 669.77 405 479.81 89.11 239.03 210.80

Profit Position of Different banks as on 30-06-2008

PositionName of the

Banks

ProfitYTD

June-08YTD

June- 07Growth

12 DBBL 1100.00 680.0 61.76%

14 B. ASIA 900.00 700.0 28.57%

21 JBL 670.00 350.0 91.43%

22 MTBL 550.00 460.0 19.57%

23 TBL 460.00 280.0 64.29%


25 ONE B. 400.00 448.0 -10.71%

SWOT ANALYSIS

From The SWOT analysis we can figure out the ongoing scenario of

MTBL. That is by doing THE SWOT analysis it is possible to find out the

strengths, weaknesses, opportunities, and threats of MTBL so to have a

better view of the present business practices of MTBL, I did the SWOT

analysis.

In SWOT analysis two factors act as: -

Internal factors, which are prevailing inside the concern, which

include strength & weakness.

External factors which act as opportunity & threat.

Prepared By: Md. Moinuddin, MBA-06. Mkt, C.U

SWOT ANALYSIS

Internal Factor External Factor

Strength Weakness Opportunity Threats

74

Strength:

Very good profit margin achieved by the last few years

Strong capital back up brings available liquidity

Efficient and experienced management team

Directors of the bank are not over ruling the decisions made by the

management team

Several deposits schemes and financial products offered by the

organization, So clients have enough options to invest their money

Bank quickly expanding its business all over the country.

Weakness:

No online banking facilities.

Performance of the marketing sector is really poor

Officers are limited experienced and not enough trained

Traditional banking system is followed

Opportunities:

Clients reliability on MTBL is growing day by day on the bank

Business Banking

Diversification

Modern facilities & computerization

Stirring Branches

Interactive Corporate Culture

After online service bank growth are rapidly increasing.

Threats:

Very competitive market

Our political unsuitability effects the banking sector very often

Our economy now passing recession this also effects the bank

Central banks policies some times are not in favor of the private

Competitors have more deposits

Competitors have more products and services

Government pressures to reduce interest rate


THE PROBLEMS OF THE BRANCH

Lack of cross Employee.

There is no customer complain desk, for this reason it is some time

occur as a irritate matter.

Officer is less than necessary.

The manpower of MTBL is not sufficient in context of their

necessity.

It takes time to take decision of Head Office to branch office.

Reluctance to add campaign.

The duration of our internship program is only two months that is

not sufficient for us to gather knowledge about the organization.


RECOMMENDATIONS

I could gain the practical knowledge in the banking sector.

Actually we can’t realize how much it’s area if anybody doesn’t

work here practically. I found that there is some system loss in

the banking sector, which is so confidential. Every commercial

bank is involved with this for their business. None bank

maintains the rules & regulations of Bangladesh Bank perfectly.

For which I think that this business is not done systematically

according to the law of banking. The management of central

bank should try to monitor it perfectly. For this reason they can

use advanced technology.

The duration, two months is not sufficient for the

recommendations. In spite of that I recommend for this bank in

order to overcome the weakness & Threats.

Top Level Management should be aware of their duty &

responsibility as if the overall condition of Mutual Trust

bank can be improved & can fight with their rival &

competitors

For the technological advancement SWIFT machine,

availability of internet service, extension of T&T line for the

more than 20 PABX line, sufficient computer & printer,

advanced software, LAN (Land Area Network) among all

computer, central generator & central Air condition,

By doing some social responsibilities Mutual Trust bank can

highlight themselves to be known & marketing as well as

advertisement

On line service can be effective for MTBL

Employees should be properly trained as if they can serve

confidently, quickly.


Manpower should be increased in the foreign exchange

because they work restless. In spite of that they can’t

complete their duty smoothly.

`Face is the index of mind’ but the out look of the Mutual

Trust bank isn’t good at all in the comparison of other

commercial bank like EBL Bank, Dhaka bank, one bank etc.

Effective decision should be taken by the trust for the more

deposit because the more deposit, the more loans, the

more profit & the more investment.

Diversification of business reduces risk. So it is also

essential.

NECESSARY STEPS FOR RAPID GROWTH

To improve the performance level to lessen the problems as stated in the

previous paragraphs MTBL might take the following steps:

Firstly the branch has to increase their advertisement and also

increase their social activities. They have to go with the people’s

needs and demands. They have to explore their name to the

people that every one can know about Mutual Trust Bank ltd,

Jubllee Road Branch.

Thirdly the branch has to take some initiative to receive some

power to sanction a certain limit of loan amount when the

customer require the loan on the urgently basis. It can earn of that

customer’s satisfaction and in future he or she may be do vast

business with the bank.

Fourthly, communicational skill of the officials should be improved

further, so that they can create an excellent communication flow

with the customer

Fifthly the branch should minimize its official unnecessary

expenses.


Lastly and importantly employee satisfaction should be ensured for

quality services. If the employee is demotivated and unsatisfied, no

further measure will work


CONCLUSION

Mutual Trust Bank Limited has been established with the objective of

providing efficient and innovative banking services to the people of all

sections of our society. One of the notable strengths of this bank is that

the disciplined and strongest Management Body backs it. The bank is

committed to contribute as much as possible within its limitations for the

economic growth and for ensuring locative value of its available

resources.

Despite stiff competition among banks operating in Bangladesh, both

foreign and local, Mutual Trust Bank, Jubilee Road branch has achieved

satisfactory progress in the areas of its operation and earned an

impressive operating profit in spite of new branch. The branch will hope

to achieve a satisfactory level of progress in all areas of its operation

including target of profitability during the year 2012.

We hope that this bank will compete with the first class bank of

Bangladesh very soon.


BIBLIOGRAPHY

BB ........................Bangladesh BankMTBL ......................Mutual Trust Bank Lt.MTB ......................Mutual Trust BankB. Asia ..................Bank Asia Ltd.One B. .................One Bank LtdCC .........................Cash creditCL .........................Classified loanCSE .......................Chittagong stock exchangeDD .........................Demand DraftDPS .......................Deposit pension schemeDSE .......................Dhaka stock exchange

FC .........................Foreign currencyFDI ........................Foreign direct investmentFE .........................Foreign exchangeFCAD .....................Financial control and accounts department

IC and PF ...............investment companies and provident fundICB ........................Investment corporation of BangladeshIDA ........................International development associationIBDA ......................Inter branch debit adviceIBCA ......................Inter branch credit advice

LIM .........................Loan against imported merchandiseLAM ........................Loan against merchandiseLTR .........................Loan against trust receiptMT ..........................Mail/Money transfer NCD ........................Negotiable certificate of depositOBU ........................Offshore banking unit

PAD .........................Payment against documentPSS .........................Pension savings scheme

SBS .........................Scheduled Bank StatisticsSEC .........................Securities and Exchange CommissionSEM ........................Secondary Exchange MarketSTA .........................Special trade arrangementSTD .........................Short term deposit

TT ...........................Telegraphic Transfer

UC ............................Unclassified


REFERENCE

Inspection Manual, Bangladesh Bank, 1993.

Rose Peter S. Commercial Bank Management. 4th ed. Singapore:

McGRAW-HILL, 1999

Annual Report of Mutual Trust Bank Ltd. 2007

Management Report of Mutual Trust Bank Limited, 2007

Annual Report of Mutual Trust Bank Limited, 2006 & 2007.

Annual Report of Trust Bank Limited, 2006

Annual Report of Bank Asia Ltd. 2007

Annual Report of One Bank Ltd. 2007

Annual Report of Dutch Bangla Bank Ltd. 2007

Annual Report of Trust Bank Ltd 2007

www.mutualtrustbank.com.

www.Jamunabankbd.com.

www.bankasia-bd.com

www.onebankbd.com

www.bddl.com.bd

www.mutualtrustbank.com

Survey CSE Library

Personal consultation with banking personal.

Previous year internship report analysis.


http://www.mutualtrustbank.com/

http://www.bddl.com.bd/

http://www.onebankbd.com/

http://www.Jamunabankbd.com./

http://www.Jamunabankbd.com./