ais in ncc bank

NCCBL

Chapter 1

Bismillahir Rahmanir Rahim

Internship Report

On

Overall Banking Operation

System of NCCBL Emphasis on

Application of Accounting & Information System

An Internship report on Overall Banking operation System of NCCBL

NCCBL

Chapter 2

EXECUTIVE SUMMARY

Banking system of Bangladesh has gone through three phases of development-

Nationalization, Privatization, and Lastly Financial Sector Reform, National Credit

&Commerce Bank Limited (NCCBL) started its journey in the financial sector of

the country as an investment company back in 1985. The company operated up to

1992 with 16 branches and thereafter with the permission of the Central Bank

converted in to a full fledged scheduled private commercial bank in May, 1993

with paid up capital Tk. 39. 00 core to serve the nation from a broader platform.

The whole working process of NCCBL is divided into 3 sections- (i) General

Banking section, (ii) Credit Section, (iii) Foreign Exchange Section This report has

been presented based on observation from NCCBL, Mirpur Branch, which is a

Non Authorized Dealer (NON AD) Branch. So in the report Researcher have tried

to concentrate on loan and advances, local LC and other part of the general

banking. NCCBL has office automation like online banking (Only for three

branches), own Software MICROBANKER.

Though foreign remittance is one of the major parts of Bank’s income but their

loan and advance and other loan schemes play a vital role in success of NCCBL.

NCCBL has offered to their clients deposit scheme, loan scheme, and remittance

service. In deposit scheme they have offered FDR, SSS and SFDS. In deposit

scheme they have always try to offer competitive interest to the clients. In loan

scheme they have special loan scheme and general loan and advance. In special

loan scheme bank have offered consumer scheme, lease financing and micro credit

financing, Special housing loan. In general loan and advance NCCBL has offered

general loan sector, export, export and import. General sector contains

conventional cash credit, Secured over draft and regular services. In export and

import they have offered LIM, LTR, Local Documentary Bill for Purchase

(LDBP), Foreign Documentary Bill For Purchase (FDBP. ). NCCBL also offered

MONEYGRAM service to their clients. NCCBL is only member of MONEY

GRAM facility in Bangladesh.

From 1993 to 2005 it’s been twelve long years of journey for NCCBL. They have

made their strong initiatives in banking sector. They can one of the best private

banks In Bangladesh, if they will match the expectation of their clients, through

their best banking service.


NCCBL

Chapter 3

CONTENTS


NCCBL

Chapter 4


NCCBL

Chapter 5

Introduction

_________________________________

1.1. Introduction

1.2. Statement of the Problem

1.3. Objectives of the Study

1.4. Scope of the Study

1.5. Duration of the Study

1.6. Limitations of the Study


NCCBL

Chapter 6

1.1 INTRODUCTION

Bank as the financial services industry is approaching full historical cycle.

Originally the banking system operated as full service industry, performing

directly or indirectly all financial services. Banks are direct agents to create

opportunities for development in a country and also provide large scale of

employment opportunities. Banks mobilize savings and make it advances to

investors and by this process make profit. As they deal with public money, their

form of business is different from others. Banks must refund publics money when

they demand & qualityful services either it makes or not. So, overall operation

system of bank should be evaluated carefully.

Banking sector is expanding its hand in different financial events every day. At the

same time the banking system is becoming faster, easier and the banking area is

becoming wider. As the demand for better service increases day by day, they are

coming with different innovative ideas & products. In order to survive in the

competitive field of the banking sector, all banking organizations are looking for

better service opportunities to provide their fellow clients. As a result, it has

become essential for every person to have some idea on the bank and banking

system.

The evaluation of banking system is a complex process involving interactions

between the environment, internal operations, and external activities. The ultimate

objective of management is to maximize the value of bank’s equity shares by

attaining the optimal mix of returns and risks. In this respect bank management

needs to develop a comprehensive plan in order to identify objectives, goals,

budgets and strategies that will be consistent with the maximization of share

values.

The primary method of evaluating internal system is by analyzing general banking

system, loans and advances system, foreign exchange system. External system is

best measured by evaluating the banks market share, regulatory compliance and

public confidence. Because of increasing innovation and deregulation in the

financial services industry, internal and external competitiveness is become much

more important than in the past.


NCCBL

Chapter 7

In researcher’s thesis paper, researcher has selected one private commercial bank

to evaluate the banking system in our banking industry. This is NCC Bank LTD.

This bank has a great impact in our economy. NCC Bank LTD has been operating

their services from 1985 as a leasing company and from 1993 as a Bank in our

country through its 16 branches. To evaluate banking system of NCCBL, it will be

helpful to have an insight into the generalized characteristics features of this bank.

1.2 STATEMENT OF THE PROBLEM

All kinds of Bank are generally supposed to be established to earn profit and help

economic and financial activities in a country. In such a context, the main business

of banking is to provide credit to the borrowers and take deposit from customers.

Beside banks are direct agents to create opportunities for development in a country

and also provide large scale of employment opportunities. Banks are the most

important functionary of financial system of a country and NCC Bank LTD is one

of them. It plays a dynamic role in the economic development of a nation through

of saving and allocation of credit to industries sectors. It diverts and employs the

funds in such avenues which are aimed to develop a country’s economy and adds

to national wealth.

Capital structure decision is the second major area in financial management. The

financing decision involves the choice of an appropriate mix of different sources of

Bank’s fund are the Government, Bangladesh Bank, Commercial Banks, local/

overseas Financial Institutions and Suppliers . The main objective of NCC Bank

LTD is to accelerate the set up of new projects and balancing, modernization,

replacement, and expansion of existing units and financing in profitable concern.

There have however, been large dues over of loans & interest.

Incase of bank generally it is measured in terms of general banking system, loans

& advances system, foreign exchange system. Every firm must in the long run, be

profitable if it is to service. Overall System is necessary of investors, lenders are to

continue support the business.


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Chapter 8

1.3 OBJECTIVES OF THE STUDY

a). Primary Objective: Beside the primary objective there are some other

objectives, which are equally important: The prime objective of the study is to

examine the banking system & performance of NCC Bank LTD. However, the

specific objectives are the followings:

To get real life experience from the organization, which will help in the future

job field.

To get an overall idea about the Mercantile Bank Ltd.

To review the consumer banking services and operating system of NCC Bank

LTD.

To measure the performance of NCC Bank LTD. during 2000-2004.

To evaluate the factors affecting performance of the bank.

To suggest the better ways of enhancing the performance of the bank.

1.4 SCOPE OF THE STUDY

The title overall banking operation system of NCC Bank LTD denotes the scope of

the study. This report is strictly confined NCCBL’s operation in Bangladesh. The

report is based on the observation and studies during researcher’s internship period

at Mirpur Branch. The study covers the bank’s functional areas such as general

banking, loans & advances, foreign exchange system of NCCBL. This will

indicate as to extent to which the servicing capacity of the customers and socio-

economic development of the country by proper utilization of capital. This study

conduct in head office & branch from which various types of relevant data is

collected that will focus the whole culture of the bank. The analysis of data covers

2000-2004 fiscal year. Moreover the problems in the operational system, and

overall idea about NCC Bank Ltd. etc are also covered in the study.


NCCBL

Chapter 9

1.5 DURATION OF THE STUDY

This study covers from 20 November to 19 January 2005. But the data are selected

from 2000 to 2004 fiscal year for research work because of insufficient

information about 2005.

1.6 METHODOLOGY OF THE STUDY

The study is based on financial and non-financial data and opinions of concerned

executives working at Mirpur branch & head office of NCCBL. There are various

methods of conducting such studies. These are library method, interview method,

observation method etc.

Two approaches have been mainly used in this report.

a) Conceptual Approach: A theoretical section is given in this report (i.e. the

organization part) to give an insight to the various information concerning

the operational function. It is given in relevance with the organization in

context i.e. NCCBL. A background of NCCBL is given to facilitate the

understanding of this report. Every single portion is discussed in order to

understand the empirical section.

b) Empirical Approach: This refers to the information that has been directly

collected and interpreted from the survey on NCCBL. The report is

prepared by interviewing the officials of NCCBL. The reports of NCCBL

and documents are also been studied to do the report.

1.6.1 SOURCES OF DATA

In preparing this report, both primary and secondary sources of information have

been used.

(A) Primary Sources of Data

When data are collected through direct searching in the field then it is called

primary source of data. Data were collected from primary sources using the

following techniques:

a). Observation Method: Observation method may be defined as the systematic

watching of facts and events occurring in the field of study. The researcher has

observed all the activities of general banking services. Through this method, he has

collected some data about general banking services.

b). Interview method: Interview is a face-to-face situation where one person (the

interviewer), asks a person being interviewed (the respondent), questions to obtain


NCCBL

Chapter 10

answer pertinent to research problems. To get the real information and data about

general banking services, researcher asked some respondents and clients directly.

Primary Sources are:

Asking the respective officers;

Direct communication with the clients;

Exposure on different desk of the bank;

File study.

(B) Secondary Sources of Data

The secondary data are collected from Internet, different article published in the

journals and magazines.

Secondary sources are:

Relevant books, Newspaper, Journals etc.

Annual Reports of Mercantile Bank Ltd. ;

Periodicals published by the Bangladesh Bank;

Different seminar papers on performance evaluation of service oriented

business;

Different publications regarding banking functions.

1.6.2 ANALYSIS OF DATA

The study covers the selected period of five years i.e. 2000-2004. Total deposit,

different advance, remittance, foreign exchange etc. were selected to measure their

growth & position. In this study the main analytical tool is overall operation

system. The necessary data are taken and analyzed in a systematic manner.

The following analysis has been done to achieve the objectives of overall operation

system study:

General banking system of the bank in last five years is analyzed through the

deposit, local remittance etc & their growth.

Loans and Advances are analyzed basing the position of different types of loans.

Foreign exchange system evaluated through the LIM, LTR, & foreign remittance

etc.


NCCBL

Chapter 11

1.7 REVIEW OF RELATED LITERATURE

The analysis of the performance of banking industry is of crucial importance.

Different methodologies can be under taken to given a insight into the performance

of banks. The studies related to the evaluation of the performance of banks are

limited. In this chapter an attempted has been made to focus on different studies in

the banking sector.

Bhattacharjee and Shaha (1989) evaluated the performance of PCBs in

Bangladesh. The reference period of the study is 1973-1987. Performance of the

PCBs has been measured on the basis of social profitability measures viz general

banking business including net profit, social profitability measures. In this study

they reveal that almost all the performance measures showed upward trends. There

were however inter-bank and intra-bank variations in performance measures. Had

all the banks been successful in attaining the level of performance of the bank

having highest level of performance this cold have much favorable impact on both

deposit mobilization and profitability. It is believed that strengthening the system

of inter bank cooperation in respect of exchange of information on achievement

levels may bring further favorable effect performance.

Chowdhury Anwar and Masum (1998) evaluated the performance of foreign

banks vis-à-vis other private commercial banks operating Bangladesh. The

government of Bangladesh has allowed a good number of foreign banks to operate

in Bangladesh. The Govt. has recently taken a special program for long term

industrial financing involving the foreign banks. This is for the first time in

Bangladesh that special fund is going to be operated banks other than specialized

banks and nationalized commercial banks. This study finds that almost all the

performance measures show good performance on the part of foreign banks. These

findings suggest that the Government decision to involve foreign banks in a greater

way is right one and it will have a positive impact on the economy of the country.

Bayes (1985): evaluation Bangladesh Banking Growth, Structure and

performance. In this study he finds that before liberation, commercial banks were

in the private sector with the objectives of meeting the needs of a private enterprise

economy. After liberation the banks were placed under social ownership and

control to fulfill both commercial and social objectives. PCBs embarked upon

expanding branches in both rural urban areas mobilizing the up tapped


NCCBL

Chapter 12

saving of the rural and semi-urban areas and providing credit to priority sectors.

There was an improvement in the growth of bank deposits after liberation, bank

deposits grew at a compound rate of 20% during 1973-1982. The advance deposit

ratio was unfavorable for

rural areas during the initial years after liberation, implying a transfer of resources

from rural to urban areas. The situation however has been improving over the

years. Net profit to bands although varied between years, but remained positive in

all the years.

Chodhuri and Choudhry (1995) evaluated of performance of private commercial

banks vis-à-vis banking sector. The results of denationalization and privatization in

the banking sector of Bangladesh so far do not indicate clear-cut improvement in

the efficiency of the banking system. The efficiency of the three denationalized

banks deteriorated in all respects during last 10 years. The performance of PCBs

though at present better only in operating aspects compared to NCBs but lagging

in allocative aspects in terns of putting less emphasis in the socially more desirable

sectors. The privatization and denationalization process is also inducing NCBs to

gradually withdraw from socially desirable sectors in order to improve their

profitability.

Bahar (1993) analyzed on the behavior of bank deposits in Bangladesh some

empirical finding. In his study he attempted to analyze the growth of bank deposits

and their determinate in Bangladesh during 1974-1992. Bank deposits are

positively influenced by growth in income, real rate of interest on deposits and

negatively to the expected rate of inflation. The author tries to explain (i) the

growth of bank deposits in Bangladesh in the light of some rates and ratio (ii) the

principal determinates of bank deposits and (iii) estimates and explains the

alternative equations for bank deposits for rural and urban bank branches.

Uddin and Quadir (1998) evaluated the comparative study of performance of

nationalization and denationalization of commercial banks in Bangladesh. With the

change of economic policy of Government and also the change of Government of

Bangladesh in 1975 ‘Socialism’ one of the state principles was replaced by ‘Social

Welfare’ and private sector once again gained momentum. As a result the Uttara

Bank and Pubali bank were denationalized in 1983 and in 1986 respectively and


NCCBL

Chapter 13

significant numbers of private commercial banks were also established. In the view

of the fact this paper deals with comparative progress of Uattra bank ltd and pubali

bank. During the period after nationalization and denationalization. It is evident

form the study that the sample banks show better performance during the period

after denationalization in terms of equity position deposit mobilization, loan and

advances and investment of fund both in nominal and real compared to the period

after nationalization in respect of profitability, liquidity and branch expansion

compared to the period after denationalization.

Saha, Rahman and Banerjee (1995) evaluated the cost efficiency in banks. The

profitability of both NCBs and PCBs has declined during the last few years. In this

context a study of cost efficiency in Banks assumes greater significance. To fulfill

this demand the authors showed the relationship between costs and some

functional indicators viz deposit, funds activities, total income etc, of various

banks and the factors influencing the increase/decrease there of in order to

determine the level of cost efficiency exiting amongst banks. The author found that

PCBs were more cost efficient as compared to NCBs on an average in respect of

productivity and manpower utilization. But the lower level of cost efficiency in

case of NCBs might be due to the various directed credit programs and social

banking imposed on them. The authors commented that cost management practices

presently being followed were yet to embrace am appropriate cost control

mechanism which would facilitate a great deal of cost efficiency in banks. Shah &

khan (2000) evaluated the efficiency of some commercial banks in Bangladesh.

This study considered twenty commercial banks selected form three groups:

nationalized, private (domestic) and foreign banks. The principal component

analysis a special case of factor analysis is adopted to measure the efficiency of

these banks based on seven productivity indicators. The analysis reveals that out of

20 banks, only 7 of them are efficient ones, 6 are foreign banks and only one is a

domestic private bank. None of the nationalized commercial banks is found to be

efficiency. Thus the study supports the general notion that foreign banks are

efficient while nationalized ones are not.

The reviews of the previous studies suggest that the banking system of Bangladesh

bas been facing some problems. They have identified many potential areas of


NCCBL

Chapter 14

development for the banking system of Bangladesh if the existing problems are

address.

Cookson, F (1989) in his seminar paper “Productivity in The Banking Industries

In Bangladesh” mentioned that “The output of a bank is to divided into three

components i. e. deposit service, loan service and other financial services for

which a fee is charged. ” According to him productivity is obtained by dividing

this output by the total employee.

He also found that, productivity in private banking is much higher than in the

NCBs. This is partly due to the very high number of NCB employees and partly

due to the lower outputs in loan services (from high bad debt costs) and the lower

earnings of fee income.

Bahar, M. H. (1989) in his seminar paper named “An Evaluation of banks in

Bangladesh: An Exploratory Approach” mentioned that productivity should be

judged from quantitative as well as qualitative aspects of performance of different

banks from the following view points:

a) Social banking

b) Growth

c) Profitability

d) Productivity

e) Customer’s service

1.8 LIMITATIONS OF THE STUDY:

Despite all out co-ordination from the bank officials, researcher faced some

limitation. The notable some of these are as under:

Learning all the banking functions within just 90 days was really tough.

Another limitation of this report is Bank’s policy of not disclosing some data

and information for obvious reason, which could be very much useful.

The Bank authority was very busy, so they could not give me enough time for

discussion about various problems.

In case of performance analysis secondary data are used.

Only five years accounting data are considered for financial analysis

This study completely depended on official records and annual reports.


NCCBL

Chapter 15

To prepare an analytical report need financial assistance. The financial

assistance provided by the department is insufficient. In perspective of

lack sufficient money, various types of analysis did not become

possible.

Another problem is that communication gap. The department should be

conducted with the company at least one month ago

Researcher’s internship was at Mirpur Branch. But for better interpretation

researcher had to collect some information from the head office.

This is researcher’s first experience on job, so there may arise some faults

though I have tried my level best.


NCCBL

Chapter 16


NCCBL

Chapter 17

Conceptual Framework of the Study

______________________________

2.1 Bank

2.2 Banking

2.3 Information System

2.4 Accounting System

2.5 Terms & Concept used in This Study


NCCBL

Chapter 18

2.1 BANK

Generally by the word “Bank” we can easily understand that the financial

institution deals with money. But there are different types of banks like; Central

Banks, Commercial Banks, Savings Banks, Investment Banks, Industrial Banks,

Co-operative Banks etc. But when we use the term “Bank” without any prefix, or

restriction, it refers to the 'Commercial banks'. Commercial banks are the primary

contributors to the economy of a country. So we can say Commercial banks are a

profit-making institution that collects the deposits from the surplus unit of the

society and then lend the deposits collected to the deficit unit of the society. So the

people of the society and the government are very much dependent on the

commercial banks as the financial intermediary. As banks are profit- earning

concern; they collect deposit at the lowest possible cost and provide loans and

advances at higher cost. The differences between two are the profit for them.

2.2 BANKING

Simply the activities of bank refer banking. It includes account opening, receive

deposit; DD, TT issue & receive; loan disbursement & collection etc. All activities

of bank together called banking.

2.3 INFORMATION SYSTEM

The information systems include all activities having to do with the systematic

flow of information within an organization. It thus excludes only nonsystemic

information such as correspondence on matters not encompassed within the regular

information structure. The field relates to information in organizations, which

include both business and other groups of people who come together in order to

achieve an objective.

2.4 ACCOUNTING SYSTEM

Accounting is the process used to measure and report to various users relevant

financial information regarding the economic activities of an organization or unit.

This information is primarily financial in nature, that is, it is stated in money

terms.

2.5 TERMS & CONCEPT USED IN THIS STUDY

Banks: Banks are considered as service producing industry and standard norms for

industrial enterprises are used in some cases to compare ratios.

Current assets:

Current assets include cash in hand and with bank, investment and other assets.

Current liabilities:


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Chapter 19

Current liabilities include deposits and other accounts (other than fixed deposits

and deposit pension scheme) bills payable and other liabilities.

Total income:

Total income is considered as total income after provision for bad and doubtful

debts.

Equity:

Equity includes paid up capital quasi-equity, reserve fund and other reserves.

Bad debts:

Bad debts are considered as fixed expenses being it is generally treated as

administrative expenses which are fixed in future.

Borrower:

In this study a borrower is a person who enjoys credit facilities from the bank in

order to start or organize an enterprise especially one involving financial risk.

Pledge:

In a pledge the costumer delivers the possession of the securities to the banker and

the banker holds the possession of securities until the debt is discharged.

According to1section 172 of contract Act 1872, “Pledge is a bailment of goods as

security for payment of a debt or performance of a promise.” Under section 148 of

this Act, bailment is the delivery of a goods by one person to another for some

purpose, under a contract that the good shall, when the purpose is accomplished,

be returned or other wise disposed of, according to the direction of the person

delivering them” The person who delivers the goods as security is called is called

the “pledgor” and the person to whom the goods are so delivered is called the

“Pledgee”. The ownership remains with the pledgor.

Customer:

In this study customer means “A person who has some sort of an account either

deposit or current account or some similar relation with a bank and from this it

follows that any person or corporation may become a customer by opening deposit

or current account or by accepting an once on current or loan account or even by

accepting a deposit receipt in acknowledgement of money left with the banker.

Banker:

In this study banker means as it is defined by English Bill Of Exchange Act 1882

i.e. “Banker inched a body of person whether incorporated or not who carry on the

business of banking”.


NCCBL

Chapter 20

Letter of Credit:

The contract between the importer and the exporter is given a legal shape by the

banker (authorized dealer) who undertakes to make the payment for the imports on

behalf of the importer. The banker undertakes the responsibility through “letter of

credit” Which, for this purpose is a letter of commitment issued by the importers

banker to his foreign Correspondent banker or branch, if any, in the exporter’s

country undertaking to horror bills of exchange drawn by the named exporter in

accordance with and upon fulfillment of the terms stipulated in the letter. From the

importer’s side it is an import letter of credit (out ward) and from the exporters

side it is an export letter of credit (inward), its opening being always arranged by

the import.

Spread:

The difference between total interest/profit earned and total interest/profit paid. It

plays a major role in determining the profitability of a bank.

Burden:

The different between non-interest /profit expense and non-interest/profit income

is defined as the Burden.

Average:

An average is single value which is considered as the most representative or

typical value for a given set of data.

Ratio:

Ratio is a fraction whose number is the antecedent and denominator the

consequent. It may also be defined as the relationship or proportion that one

amount bears to another, the first number being numerator and the later

denominator.

Capital structure:

Capital structure refers to the permanent financing of the company represented by

owned capita and loan/debt capital.

Gross profit:

Gross profit is the result of the relationship between prices sales volume and costs.

Consumers Credit Scheme:

Consumer Credit is a relatively new field of collateral-free finance of the Bank.

People with limited income can avail credit to buy household goods including car

computer and other consumer durables.


NCCBL

Chapter 21

Small Loan Scheme:

This scheme has been evolved especially for small shopkeepers who need credit

facility for their business and cannot provide tangible securities. The present

maximum range of loan is Tk. 2.00 lacks.

Lease Finance:

This has been designed to assist and encourage the genuine and capable

entrepreneurs and professionals for acquiring capital machinery, medical

equipment, computers and other items which may help them to be economically

self-reliant. Terms and conditions of this credit have been made easier than before

in order to help the potential entrepreneurs to acquire equipment of production and

services and repay the liability gradually from earnings on the basis of “Pay as you

earn”.

Hire Purchase:

To purchase some things, the Bank gives loan to client at 15% interest. The client

has to pay the principle and interest as a installment basis for a fixed period.

Security is needed here. The goods must have insurance by Insurance Company.

PAD:

The bank pays the money to the foreign company against Foreign L/C on behaves

of his client. The client pays this amount and interest later to bank.

Doctor’s Credit Scheme:

Doctor’s Credit scheme is designed to provide financing to doctors, clinics and

hospitals on easy terms.

Working capital:

Working capital refers to the net working capital i.e. (current assets – current

liabilities).

Foreign Exchange:

Foreign Exchange means foreign currency and it includes any instrument drawn,

accepted, made or issued under clause (13), Article 16 of the Bangladesh Bank

Order, 1972. All deposits, credits and balances payable in any foreign currency

and draft, travelers check, letter of credit and bill of exchange expressed or drawn

in Bangladeshi currency but payable in any foreign currencies.

Net Worth:

Net worth is the wealth of the shareholders at book value. It is the difference

between total assets and total liabilities.


NCCBL

Chapter 22


NCCBL

Chapter 23

Company Profile

______________________________

3.1 Background of NCCBL

3.2 NCC Bank Ltd at a Glance

3.3 Vision of NCCBL

3.4 Mission of NCCBL

3.5 Office Automation of NCCBL

3.6 Target Customer

3.7 Organogram of NCCBL


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Chapter 24

3.1 Background Of National Credit & Commerce Bank Ltd (NCCBL)

National Credit and Commerce bank Limited bears a unique history of its own.

The organization started its journey in the financial sector of the country as an

investment company back in 1985. The aim of the company was to mobilize

resources from within and invest them in such way so as to develop country’s

Industrial and Trade Sector and playing a catalyst role in the formation of capital

market as well. Its membership with the bourse helped the company to a great

extent in this regard. The company operated up to 1992 with 16 branches and

thereafter with the permission of the Central Bank converted in to a full-fledged

scheduled private commercial bank in May 1993 with paid up capital Tk. 39. 00

core to serve the nation from a broader platform.

During last 12 years of its operation NCCBL has acquired commendable

reputation by providing sincere personalized service to its customers in a

technology-based environment.

The Bank has set up a new standard in financing in the Industrial, Trade and

Foreign Exchange business. Its various deposit and credit products have also

attracted the clients-both corporate and individuals who feel comfort in doing

business with the Bank.

The initial authorized capital of the Bank was Tk. 75.00 core and, paid-up capital

Tk. 19.50, core at the time of conversion, which is now raised, to Tk. 39.00 core.

The present authorized capital is Tk. 250.00 core and paid up capital is Tk. 60.78

core. The sponsors of the new bank consisted of 26 (Twenty six) Members, who

comprised the first Board of Directors. The share price of the bank is currently

being quoted at both Dhaka and Chittagong Bourses at an average price of Tk.

320/- against per value of Tk. 100/-.

NCC Bank based upon its commendable business performance for the year ended

2004, has meanwhile declared stock dividend at the rate of 30%. The Bank which

started with 16 branches in 1993, has at present 41 (forty one) branches and 03

(three) Booths located in prime commercial areas of Dhaka, Chittagong, Sylhet,

Feni, Khulna, Jessore and Rangpur District Headquarters, out of which as many as

17 (seventeen) are Authorized Dealer Branches, fully equipped for dealing in

direct foreign exchange businesses.


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Chapter 25

NCC Bank is now positioned to best suit the financial needs of its customers and

make them partners of progress.

3.2 NCC BANK AT A GLANCE

(Tk. in millions)

Particulars 2004

Authorized Capital 750.00

Paid up Capital 607.81

Reserve fund & other Reserves 761.18

Equity Fund 1368.99

Deposits 16069.23

Loans & Advances 15211.15

Investment 4385.23

Import Business 13274.08

Export Business 5771.65

Operating Income 2283.37

Operating Expenses 1562.88

Operating Profit 720.49

Profit before Tax 445.50

Profit after Tax 285.16

Undistributed Profit 14.28

Total Assets (excluding contra) 21469.02

Fixed Assets 297.22

Number of Branches 36

Number of Employees 925

Earning per Share 46.91

Dividend Cash (%) -

Dividend Bonus (%) 30

Return on Equity (ROE)% 20.83

Return on Assets (ROA)% 1.33

Capital Adequacy Ratio 9.05

Non Performing Loans as percentage of Total Advances 7.87

Volume of Non-Performing Loans 1188.40

Amount of Provisions against Classified Loans 650.06

Amount of provisions against Unclassified Loans 138.90

Advance/ Deposit Ratio (%) 0.95:1

3.3 VISSION

To be in thee forefront of national development by providing all the customers

inspirational strength, dependable support and the most comprehensive


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Chapter 26

range of business solutions, through our team of professionals who work

passionately to be outstanding in everything we do.

3.4 MISSION

We shall be at the forefront of national economic development by;Anticipating

business solutions required by all our customers everywhere and innovatively

supplying them beyond expectation. Setting industry benchmarks of world class

standard in delivering customer value through our comprehensive product range,

customer service and all our activities. Building an exciting team-based working

environment that will attract, develop and retain employees of exceptional ability

who help celebrate the success of our business, of our customers and of national

development. Maintaining the highest ethical standards and a community

responsibility worthy of a leading corporate citizen. Continuously improving

productivity and profitability, and thereby enhancing shareholder value.

3.5 OFFICE AUTOMATION

Technology, Computer, Internet these thins brings a new generation of banking

service to the customer. Eight to ten years ago customers cannot think about that

they can withdraw or deposit money from their account at least within one hour.

But now it takes only at beast five minutes for withdraw their money. This is the

simple example what technology brings to banking sector. In before bakers had to

maintain huge ledger book for their daily or any sorts of banking record. But now

they can do it by one click and by strike of few buttons. Online banking is now

getting more and more necessary part banking sector. NCC Bank Ltd has also

realized the current fact and they also try to serve online banking service to their

valued customer. Though they do not launch online banking service extensively

but within this year and next year they are trying to introduce online banking

service at least primarily for the branches of Dhaka and some other key areas. Now

they have only three branches under online banking service. Mirpur Branch,

Dhanmondy Branch and Uttara Branch are now serving online banking service.

These three branches have Wide Area Network (WAN) among themselves. So

customers can get online Banking service only from these three branches. NCC

Bank has own software. They had Software named ADNAN-2004, but now they

are working with MICROBANKER, which they purchase from India. They have

web page (www. nccbank-bd. org). Customer can get detail information from the

web page. NCCBL also has credit card and ATM machine.


http://www.nccbank-bd.org/

NCCBL

Chapter 27

3.6 TARGET CUSTOMERS

Due to the predecessor company’s involvement investment financing sector of the

country the bank inherited its top corporate customers. Moreover the bank is

involved in import trade financing. Bulk importers of consumer durable, food

grains industrial raw materials are its customers. The bank has financed in textile

and apparels sectors. The bank has a trend of choosing customers from diversified

groups. The bank has first class customers in the construction sectors involved in

high-rise building, heavy construction and roads and high way construction.

3.8 ORGANOGRAM OF NCCB

Managing Director (MD)

Deputy Managing Director (DMD)

Senior Executive Vice President (SEVP)

Executive Vice President (EVP)

Senior Vice President (SVP)

Vice President (VP)

Senior Asst. Vice President (SAVP)

Asst. Vice President (AVP)

Senior Principal Officer (SPO)

Principal Officer (PO)

Senior Officer (SO)

Officer (Grade One)

Junior Officer (JO)

Asst. Officer (AO)


NCCBL

Chapter 28


NCCBL

Chapter 29

General Banking System of NCCBL

______________________________

4.1 Deposit

4.2 Local Remittance

4.3 Clearing

4.4 ATM &Credit Card Services

4.5 Locker Services

4.6 Cash Management


NCCBL

Chapter 30

4.1 DEPOSIT

Deposit is the main part of bank’s fund. It is almost impossible to think about

banking without deposit. So, banks try to maximize its deposit, try to secure it and

try to maintain an easy flow of deposit. Money market and capital market

transactions make deposit collection process difficult for banks. Notice that few

years before current deposit was higher than term deposit. But at present

depositors like to keep their fund as term deposit.

These deposits have an impact on the banks lending and investment policy. So,

banks try to increase their deposit by offering attractive package to the depositors.

Depositors have their own choice that is changing with time. With this change

banks innovate new deposit collection policy. These activities of banks related

with deposit are known as deposit management.

4.1.1 OBJECTIVE OF BANK DEPOSIT

Banks mainly collect deposits for increase their fund. Other than it deposits have

also some other objectives. These are

Collection of bank fund.

Ensure productive investment of the savings of the client.

Extending the scope of loan.

Fulfillment the excess need for money.

Socio participation maintaining social responsibility.

4.1.2 DEPOSIT PROCESSING:

Deposit start from account opening and end with transaction in account. Notice

that every activities of the account holder have an impact on the books of account

of the bank. The steps of deposit processing are given below:

New account section gives suggestion to the customers about the suitable

accounts that the bank have for their client.

Acceptance of necessary application, photograph and documents.

Checking department scrutiny the documents that customer submitted with

application.

After scrutiny bank manager give permission to open a new account.

Then customers have to deposit some money as primary deposit.

In computerized banking system new account is initiated and account

holder’s profile entered into database.


NCCBL

Chapter 31

Delivered checkbook and deposit receipt to the account holder.

In manual banking system a ledger folio is specified for book keeping of the

new account.

After a specific period account statement sent to the account holder.

Banks review the account and verify the correctness of the balance of the

account.

Banks also try to influence the potential depositors to open account with

them.

4.1.3 LEVEL OF DEPOSIT OF THE BANK:

In commercial banking amount of deposit depends on the bank’s nature of lending

and borrowing. From the collected deposit banks keep some parts of its deposit as

statutory reserve for maintain their liquidity position. After that they determine the

loan able fund. By increasing or decreasing the level of statutory reserve, open

market operation, bank rate and discount rate government can change/influence the

amount of loan able deposit.

A bank may be an efficient one but it cannot collect deposit as much as they want.

Deposit level of the competitor banks depends on the government monetary policy,

tax policy, interest rate policy, and numbers of performing banks, strength and

weakness of competitor banks, quality and efficiency of working force.

The reasons on which the level of deposits depends are given bellow:

Competitive interest rate

Physical features of the bank office

Use of modern and electronic technology

Skilled bank executives

Innovating new services

Inclusion of socially respective person in the board of directors

Attractive loan and investment scheme policy

Suitable location for the office

Advantage of early start

Economic condition


NCCBL

Chapter 32

4.1.4 DEPOSIT INSURANCE

There are risk involve in all business. Banking business is not out of risk factor. In

banking business banker take insurance coverage on the deposit that they have

taken from the depositors. It ensures the return of the depositor’s money in case of

bank failure. This process of insuring the deposit of the banks is known as deposit

insurance. Some insurance company have special scheme for deposit insurance.

For this purpose insurance companies charge premium for the services that they

have provided. This premium depends on the risk factors that involved with the

deposits.

4.1.6 TYPES OF DEPOSIT OF NCCBL

a) Sundry Deposit

b) Current Deposit (CD)

c) Savings Deposit (SB)

d) Short Term Deposit (STD)

e) Special Savings Scheme (SSS)

f) Special Fixed Deposit Scheme (SFDS)

g) Fixed Deposit (FDR)Bearer Certificate of Deposit (BCD)

4.1.5. DEPOSIT MIX OF NCCBL (2000-2004):

Deposit mix means the proportion of the different types of deposit in the bank’s

total deposit. This deposit mix helps banks to take their operational decisions.

Deposit mix of the NCCBL for the year 2000-2004 shown as bellow:

Deposit Mix - 2000

11%

11%

8%

9%1%

49%

7%

4%

Sundry Deposit

Current Deposit

Short TermDeposit

Savings Deposit

Special SavingsSceheme

Special FixedDeposit Sceheme

Fixed Deposit

Bearer Certif icateof Deposit

Figure-1


NCCBL

Chapter 33

Deposit Mix- 2001

8%11%

6%

7%2%

6%53%

7%

Sundry Deposit

Current Deposit

Short Term Deposit

Sav ings Deposit

Special Sav ings

Scheme

Special Fixed Deposit

Scheme

Fixed Deposit

Bearer Certif icate of

Deposit

Figure-2

Deposit Mix- 2002

8%8%

5%

8%2%

7%

4%

58%

Sundry Deposit

Current Deposit

Short Term Deposit

Sav ings Deposit

Special Sav ings

Scheme


Scheme

Fixed Deposit


Deposit

Figure-3

Deposit mix - 2003

8% 7%5%

10%4%

11%

1%

54%

Sundry Deposit

Current Deposit

Short Term Deposit

Sav ings Deposit

Special Sav ings

Scheme


Scheme

Fixed Deposit


Deposit

Figure-4


NCCBL

Chapter 34

Deposit Mix - 2004

5.5% 10.03%4.57%

11.62%

5.01%7.87%

0.96%

54.43%

Sundry Deposit

Current Deposit

Short Term

Deposit

Sav ings Deposit

Special Sav ings

Scheme

Special Fixed

Deposit Scheme

Fixed Deposit

Bearer Certif icate

of Deposit

Figure-5

4.1.7 SECTORAL DEPOSIT

a) Sundry Deposit: It is a non-interest bearing deposit. Any sort of non-interest

bearing deposit is good for the institutions. Though it is a liability, but bank

doesn’t pay any interest against this deposit. So, the sundry deposit of any bank’s

increase that will be a good part for the concern bank.

The sundry deposit of NCCBL for the year 2000-2004

(Percentage of total deposit)

2000 2001 2002 2003 2004

11% 8% 8% 8% 5. 5%

Table – 1: Annual Report2000-2004

Sundry Deposit

0%3%

6%9%

12%

2000 2001 2002 2003 2004

Year

% o

f T

ota

l D

epo

sit

Figure-6


NCCBL

Chapter 35

Gradually the sundry deposit of NCCBL decreases. So, we can say in case of

interest it was not favorable for NCCBL. Because, those amount of deposit was

non-interest bearing. So, it would be higher the bank could invest those amount,

but there were no cost of fund. In other word, this declining graph shows the

bank’s service good will. For example we can mention sundry creditors. Over the

year sundry deposit is decreased that means sundry creditors also decreased. This

decreasing sundry creditor indicates, NCCBL paid to their creditors timely. So, in

case of good will this trend of sundry deposit is good for the NCCBL.

b) Current Deposit: It is also a non-interest bearing deposit. If non-interest

bearing deposit is higher better for bank. Bankers encourage the clients to open c/d

account, because of its non-interest bearing characteristics.

Last five (5) years current deposit of NCCBL


2000 2001 2002 2003 2004

11% 11% 8% 7% 10. 03%

Table-2: Annual report 2000-2004

Current Deposit

0%3%

6%9%

12%

2000 2001 2002 2003 2004

Year

% o

f T

ota

l D

epo

sit

Figure-7

In the year 2000 and 2001 NCCBL’s current deposit was 11% but in thee year

2002 and 2003 this current deposit decreased, because of more competition in the

market. Again in the year 2004 they were able to increase their current deposit at

10. 03% by using their good will, dedication and service to the giant business

people. It is also indicates that, The NCCBL gain the faith of business people.


NCCBL

Chapter 36

c) Short Term Deposit (STD): According to characteristics, short-term deposit is

similar to current deposit except interest. Though it is C/D account but bearing

some interest. Currently this interest rate is 5. 50%.

Short Term Deposit of NCCBL for 2000-2004


2000 2001 2002 2003 2004

8% 6% 5% 5% 4. 57%

Table – 3: Annual Report 2000-2004

Short Term Deposit

0%3%

6%9%

12%

2000 2001 2002 2003 2004

Year

% o

f T

ota

l D

epo

sit

Figure-8

If Short-term deposit is less, better for bank. So, this declining graph is good

NCCBL.

d) Savings Deposit: Savings Deposit is an interest bearing deposit. Higher the

savings deposit, greater the faith to the concern bank of the clients. When a client

feel secured about their money only then they keep their money.

Savings Deposit of NCCBL for 2000-2004


2000 2001 2002 2003 2004

9% 7% 8% 10% 11. 62%

Table – 4: Annual Report-2000-2004

As we see the graph of savings deposit s of NCCBL – it is moved up-wards year to

year, except 2000. In the year 2000 it was 9% of total NCCBL’s deposit, but fallen

it down in 2001 at 7%.


NCCBL

Chapter 37

Savings Deposit

0%3%

6%9%

12%

2000 2001 2002 2003 2004

Year%

of

To

tal

Dep

osit

Figure-9

Then after this deposit curve rising up-wards up to 2004. It indicates- individual

client or house hold feel secured keeping their money with NCCBL. I mention

individual client because, most of the business client like to operate their business

by C/D account, but individual or household prefer to continue their transaction by

savings account. Interest rate is another factor of deposit. Present interest rate of

savings deposit is @ 6% of NCCBL.

e) Special Savings Scheme (SSS): Special Savings Deposit is an interest bearing

deposit. The duration of the scheme is 5 years or 10 years. A depositor may open

one or more accounts of different installments in the same Branch. The monthly

installments of Tk. 500/- to Tk. 10000/- may be deposited every month during the

entire period of the scheme

The depositors will be paid a specified amount as per the following table:

Monthly Installment (Taka) Amount to be paid on completion of

5 Years (Tk.) 10 Years (Tk.)

500/- 38134/- 100804/-

1000/- 76268/- 201608/-

1500/- 114402/- 302412/-

2000/- 152530/- 403216/-

2500/- 190670/- 504020/-

3000/- 228804/- 604824/-

3500/- 266938/- 705628/-

4000/- 305072/- 806432/-

4500/- 343206/- 907236/-

5000/- 381340/- 1008040/-

10000/- 762680/- 2016080/-

Table-5


NCCBL

Chapter 38

Last five years Special Savings Deposit of NCCBL


2000 2001 2002 2003 2004

1% 2% 2% 4% 5. 01%

Table – 6: Annual Report2000-2004

As we see the growth of special savings deposit of NCCBL, it is upwards. In the

year 2000 it was just 1% and in 2001 & 2002 it was 2% respectively. But in the

year 2003 it grown 2% than previous year. It was a good move for NCCBL.

Higher the special savings deposit better for the bank to invest this money in

different sector. Because of, duration of this SSS, which is 5 or 10 years.

Special Savings Deposit

0%3%

6%9%

12%

2000 2001 2002 2003 2004

Year

% o

f T

ota

l D

epo

sit

Figure-10

f) Fixed Deposit: It is a major part of total deposit and term deposit also. Though

it is an interest bearing deposit, bankers encourage the clients (both house hold &

business) to deposit their money under this scheme. In the fixed deposit scheme

major factor is interest rate. If interest rates increase, deposit will be increased of

the bank. It is a normal course. One thing should be mentioned- when increase the

interest of any bank? If any bank feels fund shortage only then they are willing to

pay higher interest rate.

Present situation is – NCCBL’s interest rate on fixed deposit @ 10. 50% for one

year, 10. 25% for six (6) months, 10% for three (3) months and 9. 5% for one (1)

months. Some other banks are giving more interest than NCCBL, like @ 11% for

one year and so on. What does it mean? We can get one point easily from this

statement that some other bank’s fund shortage is more than NCCBL. That’s why


NCCBL

Chapter 39

they are considering higher interest against fixed deposit. We know that lower the

interest rate lower the cost of fund. This lower cost of fund is an important

objective of the management.

Although interest rate of fixed deposit is not as much as higher, NCCBL’s fixed

deposit is increased for last five years.

Fixed Deposit of NCCBL for 2000-2004


2000 2001 2002 2003 2004

49% 53% 58% 54% 54. 43%


Fixed Deposit Scheme

25%

35%

45%

55%

2000 2001 2002 2003 2004

Year

% o

f T

ota

l D

epo

sit

Figure-11

In case of fixed deposit, clients consider two (2) things- one is interest rate and

another is certainty of their money. That means financial strength and stability of

the concern bank. NCCBL’s interest rate is not equal or higher than their

competitors, but their fixed deposit curve is moving upwards. It is a great

achievement for NCCBL.

g) Special Fixed Deposit Scheme: It is similar to fixed deposit. But only one

dissimilarity is – client can draw their interest amount monthly basis. Fixed

income group of client like to deposit their money under this scheme.


NCCBL

Chapter 40

Special Fixed Deposit of NCCBL for last five years (2000-2004)


2000 2001 2002 2003 2004

4% 6% 7% 11% 7. 87%


Special Fixed Deposit Scheme0%

3%6%

9%12

%15

%

2000 2001 2002 2003 2004

Year

% o

f T

ota

l D

epo

sit

Figure-12

h) Bearer Certificate of Deposit: It is an instrument of deposit, where depositors

name and address is not mentioned; only a receipt number is there. Just two or

three years ago Government of Bangladesh ruled on this type of deposit. They are

discouraging about bearer certificate of deposit. As a result bearer certificate of

deposit of every bank is declining. Some amount of bearer certificate of deposit is

keeping by the banks, which are not yet matured.

NCCBL’s bearer certificate of deposit for the year 2000-2004


2000 2001 2002 2003 2004

7% 7% 4% 1% 0. 96%


This percentage indicates that NCCBL abide by the rules and regulations of

Central Bank and Government of Bangladesh also.


NCCBL

Chapter 41

Bearer Certificate of Deposit

0%4%

8%12

%

2000 2001 2002 2003 2004

Year

% o

f T

ota

l D

epo

sit

Figure – 13

4.1.8 DEPOSIT GROWTH:

The bank mobilized a total deposit for 2000-2004 (Tk. In million) 10557.72,

12848.71, 16062.35, 15153.90 and 16069.23 which is increased of 20.71%,

21.70%, 25.01% respectively over the preceding year and decreased -5.65% for

2003 over previous year (2002), again increased 6.04% over previous year (2003).

10

55

7.7

2

12

84

8.7

1

16

06

2.3

5

15

15

3.9

0

16

06

9.2

3

0.00

3000.00

6000.00

9000.00

12000.00

15000.00

18000.00

Tk

. in

Mill

ion

2000 2001 2002 2003 2004

Year

Deposit (2000-2004)

Figure – 14

Deposit Growth

-10.00%-5.00%0.00%5.00%

10.00%15.00%20.00%25.00%30.00%

2000 2001 2002 2003 2004

Year

% o

f G

row

th

Figure-15


NCCBL

Chapter 42

Several deposit schemes (Special Savings Scheme, Special Fixed Deposit Scheme)

introduced by the NCCBL, helped in mobilization of growth in deposits of the

bank.

4.1.9 FIXED DEPOSIT RATES (FDR)

NCC Bank is a Progressive Commercial Bank in Private Sector. It creates new

opportunities for its clients. It gives customized services and maintains harmonious

banker-client relationship. It contributes towards formation of national capital,

growth of savings & investment in trade, commerce & industrial sectors. NCCB

offers following attractive rates of profit to its Depositors on Term & Savings

Deposits:

a). Term deposits

Nature of Deposits Rate of Interest

Fixed Deposit 1 month 9%

Fixed Deposit / Bearer Certificates for 3 months 10%

Fixed Deposit / Bearer Certificates for 6 months 10. 25%

Fixed Deposit / Bearer Certificates for 1 year 10. 50%

Fixed Deposit / Bearer Certificates for 2 years 10.25% - 11.25%

Fixed Deposit / Bearer 10.75% - 11.50

Table-10

b). Saving and short term Deposits:

Savings deposit 6. 00%

Short term Deposit 5. 00%

In addition to above, higher rate of profit is offered on bulk deposits. With a view

to ensuring risk free and profitable investment of limited income of majority of our

people & thereby providing maximum benefits.

4.1.10 SPECIAL SAVINGS SCHEME (SSS)

Like ‘Deposit Pension Scheme’, this scheme includes the following features for

the convenience of the clients. The monthly installments of Tk. 500/- to Tk. 2500/-

may be deposited every month during the entire period of the scheme. The

duration of the scheme is 5 years or 10 years. The depositors will be paid a specified

as per the following table:


NCCBL

Chapter 43

Monthly Installment (Taka)Amount to be paid on completion of

5 Years (Tk.) 10 Years (Tk.)

500/- 38134/- 100804/-

1000/- 76268/- 201608/-

1500/- 114402/- 302412/-

2000/- 152530/- 403216/-

2500/- 190670/- 504020/-

3000/- 228804/- 604824/-

3500/- 266938/- 705628/-

4000/- 305072/- 806432/-

4500/- 343206/- 907236/-

5000/- 381340/- 1008040/-

10000/- 762680/- 2016080/-

TABLE-11

A depositor may open one or more accounts of different installments in the same

Branch. Loan may be extended up to 80% of the deposited amount

4.1.11 SPECIAL FIXED DEPOSIT SCHEME (SFDS)

Any amount of Tk. 1,00,000/- or its multiple may be deposited under this scheme.

Duration of the Scheme is 3(three) years. Monthly interest will be given to the

depositor against the deposited amount according to the following schedule.

Amount Deposit (Tk.) Monthly profit (Tk.)

50,000/- 500/-

1,00,000/- 1,000/-

2,00,000/- 2,000/-

3,00,000/- 3,000/-

4,00,000/- 4,000/-

5,00,000/- 5,000/-

6,00,000/- 6,000/-

7,00,000/- 7,000/-

8,00,000/- 8,000/-

9,00,000/- 9,000/-

10,00,000/- 10,000/-

TABLE- 12


NCCBL

Chapter 44

4.2 LOCAL REMITTANCE

Remittance means transmission of money from 0ne place to another. There are

different modules of remittance. They are as follows:

a) TT: Telegraphic Transfer

TT is the quickest method of transferring fund from one place to another. The

remitting branch sends a telegraphic / telephonic / Fax message to the branch at

the other end to pay a certain sum of money to a named payee.

Here the remitter bears the additional charge of telex / telephone & 15% vat of

TT charge. Charge for TT is 0. 10 % of the principal amount and the additional

charge for telex. The telephone charge is tk. 30.

b) DD: Demand Draft

It is an instrument containing an unconditional order of one bank to pay a

certain amount of money to the named person or order the amount therein on

demand. DD is very much popular instrument for remitting money from one

corner of money to another.

Commission for DD is 0. 10 % of the principal amount. The remitter also have

to pay 15% of commission & postage charge tk. 30.

c) PO: Pay Order

It is process of money transfer from payer to payee within a certain clearing

area through banking channel. A person can purchase payment order in

different models such as Pay Order by cash, Pay Order by check.

Commission for PO is tk. 10 for up to the principal amount of tk. 100000,tk. 20

up to the principal amount of tk. 500000 & tk. 50 for more than tk. 500000.

4.3 CLEARING

Clearing stands for mutual settlement of claims made in among member banks at

an agreed time and place in respect of instruments drawn of each other.

Clearing House is an arrangement under which member banks agree to meet,

through their respectives at the appointed time and place to deliver instruments

drawn on the other and in exchange to receive instruments drawn of themselves.


NCCBL

Chapter 45

The nit amount payable or receivable as the case may be is settled through an

account kept with the controlling bank (Bangladesh Bank / Sonali Bank).

4.3.1 Types of clearing

There are two types of clearing. These are 1. Outward Clearing & 2. Inward

Clearing.

a). Outward Clearing

When a particular branch receives instruments drawn on the other bank within

the clearing zone and sends those instruments for collection through the

clearing arrangement is considered as Outward Clearing For the particular

branch. This branch is known as collecting branch.

b). Inward Clearing.

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

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

Clearing department also involved in Local Bills for Collection (LBC) and

Outward Bills for Collection (OBC). When NCCBL transfers fund within

Dhaka city that means in local area then they send LBC and in forward

responses get Inward Bills for Collection (IBC). When NCCBL is responsible

for transferring fund then they involve in Outward Bills for Collection (OBC)

and OBC is sent through Demand Draft(DD), Telegraphic Transfer(TT). OBC

and LBC are sent against of commission and commission varies for different

amount.

4.3.2 Procedure of Clearing: Flow Sequence

The procedure of clearing are given bellow sequencely.

a) Procedure of Outward Clearing: Flow Sequence

First Tire: Collecting Branch

1. The instrument is deposited duly entered in the pay in slip or voucher.

2. The instrument is checked for any apparent discrepancy and is compared

with the particular noted in the pay in slip.

3. In case an order instrument is being deposited in second payee’s account

guarantee is obtained from the second payee and is attached to the pay in

slip.

4. Incase the payee’s name on the specially crossed instrument differs

slightly that of the depositor, the instrument may be accepted but only


NCCBL

Chapter 46

from customers well known to the bank and after obtaining an

indemnity which is attached to the pay in slip.

5. Duly signed and return of counterfoil to the customer.

6. The particulars of the instrument and voucher are entered in the Outward

Clearing Register/ Computer.

7. Prepare voucher: Voucher to be passed on the following working day.

Suspense A/C Clearing adjusted Dr.

All pay in slips/ voucher Cr

8. Sorting of instruments bank-branch wise and accordingly prepares sub-

main schedules.

9. Prepare House page with according to main schedule.

10. Tallied house page with Out ward Clearing Register.

11. The house page with instrument sent to principal / Local Office / Main

branch

12. In the following working day prepared voucher (SL No. 7) is to be

passed, if any return and unpaid instrument is received from principal

branch, in addition to above voucher the following voucher will be

passed.

Party A/C Dr.

Suspense A/C Clearing adjustment Cr

13. When advice is received from principal / local office, the following

voucher is to be passed.

Head Office Party A/C Dr.


Second Tire: Principal Branch / Local Office / Main Branch.

Instrument received by this office same as previous section Sl No. 1 to 7.

Lodgment by this Branch

1. Received house pages with instruments from the branches.

2. Recorded the amount in a register from house page.


NCCBL

Chapter 47

3. The instruments with schedules are rearranged bank-branch wise and

prepare main schedules for each bank.

4. Prepare house page.

5. The instruments with schedules, house page and the house book are sent

to the clearinghouse through bank representative.

Third Tire: Clearing House (Bangladesh Bank / Sonali Bank)

The instruments are delivered to the respective banks.

b) Procedure of Inward Clearing: Flow Sequence

First Tire: Clearing House (Bangladesh Bank / Sonali Bank)

1. The instruments are drawn on bank which on themselves are received

from other banks in the clearinghouse.

2. The amount and number of instruments received are entered in the house

book from the main schedule of respective banks.

3. The amount of instruments delivered, received and the differences are

written on a figure slip provided in the clearinghouse.

Second Tire: Principal Branch / Local Office / Main Branch.

1. The instruments with schedules are arranged branch wise.

2. The amount of each schedule received is entered in the house pages of

the respective branches.

3. The respective house pages are totaled and check the amount with total

amounts of instrument received from all banks.

4. The instruments are sent to respective branches with the slip showing

total amount and number of instruments.

5. The instruments sent to the branches concerned for clearance and advice

are collected from them for honored checks.

Third Tire: Paying Branch

1. Particulars of the instruments are compared with the schedule.

2. The instruments are sent to the respective departments for honoring

them.

3. For the total value of honored checks pass the following vouchers:


NCCBL

Chapter 48

Party A/C Dr.

Head office A/C Cr

4. Dishonored checks (if any) with reason memo and credit advice sent to

principal branch.

4.3.3 SAME DAY CLEARING

The Bangladesh Bank started same day clearing of checks amounting to tk. Five

lac and above to help the country’s business community speed up its activities. The

system allows bank clients to encash checks and other instruments for tk five lac

and above within the day of submission. Presently, such withdrawal takes at least

two days, as it requires clearance from the central bank. Initially, 202 branches of

50 nationalized, private and foreign banks in Dhaka, who are the members of the

Bangladesh Bank clearing house, introduced the system.

From Sunday through Wednesday, the same day clearing will start at 11 am and

close at 12 noon while return clearing will start at 2 pm. On Thursday, it will start

at 10 am and close at 11 am. The return clearing will start at 12noon. The banks

have selected their respective branches situated within four kilometer of the central

bank head office for introducing same day clearing

4.3.4 Reasons for return of the check

1. Payee’s Endorsement required

2. Bank’s Endorsement required

3. Bank’s confirmation on Payee’s Endorsement required

4. Drawer’s Signature differs

5. (a) Check Post Dated (b) State dated Check

6. Amount in Words and figures differs

7. Alteration requires drawer’s full signature

8. Check Mutilated

9. Payment stopped by the Drawer

10. Effects not cleared, may be presented again on

11. Insufficient Fund

12. Not Arranged for

13. Exceeds Arrangement

14. Crossed Check should be presented through Banker


NCCBL

Chapter 49

15. Clearing House Stamp required

16. Refer to Drawer

17. Check to be signed in the presence of and attested by an officer of the Bank

18. Payee’s Identification required

19. Bank’s Discharge Irregular

Not drawn on us.

4.4 CASH MANAGEMENT

The NCC Bank Limited has a heavy equipped cash section. Cash is received and

disbursed in this section. The cash section consists of a one head teller, five tellers.

A) Receiving cash

Any person wants to deposit money fills up the deposit slip or pay in ship and

gives the form along with the money to the teller. The teller checks the A/C

number, amount of taka both in words and in figure. Then the teller gives the entry

to the receiving cashbook and also writes the denomination of currency at the book

of deposit slip. Then the teller sends the deposit slip with counterfoil credit

voucher and cashbook for rechecking the particulars and for a second signature to

the head teller. After this second signature a stamp “cash Received” is given over

the credit voucher. At the end of the day total of scroll book are entered in the

cashbook and total of the credit vouchers are found out and checked with the

previous entries. The process is same for cash received the date of the next day.

B Disbursing Cash

The NCCBL, Mirpur branch received various financial instruments for

encashment. The common instrument handled by the branch is Check, demand

draft, pay orders, mail transfer receipt, telegraphic transfer receipt and debit cash

vouchers etc.

This instrument is hacked for apartment tenor. If the instrument is all right, it is

(Check) sent for posting by computer. After posting, signature is verified by the

Head. Then the check is sending for cancellation. After checking the A/C number,

payee instruction and date the cancellation, officer cancels the check. There after

the payment is done. The process is same for other financial instrument along with

the clearing step. Bearer check is paid in cash and cross check is balanced to the

A/C.


NCCBL

Chapter 50

Debit Card &Credit Card

NCC Bank is extending ATM facility through E-Cash shared ATM Network.

Cardholders can withdraw cash through the 18 locations of Dhaka and Sylhet 24

hours a day 365 days of the year. More locations are to be added soon.

Cardholders can also pay their Telephone bill (BTTB), Mobile phone (Grameen

phone) and more utility bill payment facilities are in pipeline. NCC Bank is

member of world renowned MasterCard and Visa International. MasterCard and

Visa Card of NCC Bank for both local and international use are in market.


NCCBL

Chapter 51


NCCBL

Chapter 52

Loans &Advances System of NCCBL

______________________________

General loan

Small Loan Scheme

Specialized Loans of NCCBL


NCCBL

Chapter 53

5.1 LOAN AND ADVANCES:

Making advances is the primary function of a bank. A major portion of its funds is

used for this purpose and this is also the major sources of bank’s income.

Loans are the right to receive payment or an obligation to make payment on

demand or at some future time on account of the immediate transfer of goods

(securities).

Loans are the largest asset item, which generally account for half to almost three-

quarters of the total value of all banks assets.

5.2 TYPES OF LOANS AND ADVANCES

A bank’s loan account typically is broken down into several groups of similar type

loans. The Loan and Advances made by the commercial banks can broadly be

classified into three (3) categories.

A) Continuous Loan: These are those advances which do not have any set

schedule for drawing or disbursement but usually have a terminal date of full

adjustment or repayment.

Example: Cash Credit (CC), Over Draft (OD)

NCCBL allows credits to individuals /firms /companies to help their business in

the following categories:

B) Term Loan: These are loans which have a specific term for repayment as

specified in the loan agreement.

Example: Loan (General), Transport Loan, Project Loan, Lease Financing, House

Building Loan and Other Loan etc.

C) Demand Loan: The loan which become payable after serving demand notice

by the bank concerned are termed as Demand Loan.

Example: LIM, LTR, PAD, Loan against Packing Credit, Loan against Investment

etc.

5.3 VARIOUS LOANS OF NCCBL AND THEIR POSITION

5.3.1 Cash Credit (CC):

A Cash Credit (CC) is an arrangement by which the customer is allowed to borrow

money up to a limit. This is a permanent arrangement and the customer need not

draw the sanctioned amount at once, but draw the amount as and when required.

They can put back any surplus amount, which they may find with them. Thus Cash

Credit (CC) is an active and running account, which deposits and with


NCCBL

Chapter 54

drawls may be affected frequently. Interest is charged only for the amount

withdrawn and not for the whole amount charged.

If the customer does not use the cash credit (CC) limit to the full extent, a

commitment charge is made by the bank. This charge is imposed on the unutilized

portion of Cash Credit (CC) only.

Cash Credit (CC) provides an elastic form of borrowing since the limit fluctuates

according to the needs of the business. Cash Credits (CC) are the most favorite

mode of borrowing by large commercial and industrial concerns in our country.

Cash Credit (CC) arrangements are usually made against the security of

commodities hypothecated or pledged with the bank.

a) Cash Credit (Hypothecation): This type of credit is allowed to the traders and

industrial borrowers for promoting trade and commerce and industries. In case of

hypothecation the possession of goods is not given to the bank. The goods remain

at the disposal and in the go downs of the borrower. This is given access to goods

whenever it so desires. The borrower furnishes periodical return of stock with the

bank

b) Cash Credit (Pledge): Allowed for promoting trade, commerce and industries

of the country against pledge of stock in trade under Bank’s control. In case of the

pledge, the goods are placed in custody of the bank with its name on the go down

where they are stored. The borrower has no right to deal with them.

Cash Credit (CC) of NCCBL for last five years (2000-2004)

Amount in Million Tk.

2000 2001 2002 2003 2004

1532 1910 2243 2407 2663



NCCBL

Chapter 55

1532 19

10 2243 2407 26

63

0

500

1000

1500

2000

2500

3000

Am

ou

nt

in m

illio

n T

aka

2000 2001 2002 2003 2004

Year

Cash Credit (CC)

Figure – 17

Over the year NCCBL’s cash credit increased. Reason behind this is – they

provided quality services to their customers and other thing is- business people

understood the usefulness of this type of advances. Interest rate of cash credit of

NCCBL is @14.5%.

5.3.2 Overdraft (OD): Overdraft (OD) is an arrangement between a banker and

its customer by which the latter is allowed to withdraw over his credit balance in

the current account up to an agreed limit. This is only a temporary accommodation

usually granted against securities. The borrower is permitted to draw and repay

any number of times, provided the total amount overdrawn does not exceed the

agreed limit. The interest is charged only for the amount drawn and not for the

whole amount sanctioned.

A cash credit is differs from an overdraft in one respect. A cash credit is used for

long term by businessmen in doing regular business whereas overdraft is made

occasionally and for short duration. There are two kinds of overdraft.

i) Secured overdraft

ii) Unsecured overdraft

a) Secured overdraft: Secured overdrafts are loans which have collateral

attached to them in the form of a lien. A lien is a monetary claim against a property

to be fulfilled before repeat ownership can take place.

Secured overdraft divided into two forms. There are: - a) Secured overdraft

financial obligation (SOD-FO), b) Secured overdraft general (SOD General).


NCCBL

Chapter 56

1. SOD (FO): Allowed against financial obligation (Like- FDR, SSS

etc.) for promotion of economic and business activities.

2. SOD (General): Generally allowed to the traders for business

promotion and economic activities. In case of SOD (General), bank

keep the land as collateral.

b) Unsecured overdraft: Banks, sometimes, grant unsecured overdraft for small

amount to customers having current account with them. Such customers may be

government employees with fixed income or traders. Unsecured overdrafts are

permitted only where reliable source of funds are available to a borrower for

repayment.

Overdraft of NCCBL for the year 2000-2004


2000 2001 2002 2003 2004

1663 1291 1957 1913 2097

Table – 15: Overdraft (OD): Source: Annual Report 2004- 2000

1663

1291

1957

1913 2097

0

500

1000

1500

2000

2500

Am

ou

nt

in m

illio

n T

aka

2000 2001 2002 2003 2004

Year

Overdraft (OD)

Figure – 19: Overdraft (OD)

This diagram indicates that NCCBL’s customers’ cooperation was satisfactory

level. That’s why it’s increased over the last five years.

5.3.3 Special Housing Loan Scheme (SHLS)

Housing is one of the prime needs of mankind. Everybody has a desire to have a

dwelling house of his own. In the past man had to depend on his personal


NCCBL

Chapter 57

recourses, /asset to construct a house. But in the present days, the scenario is

different. Much company has come forward to finance in the housing sector.

People can now easily finance from these organization. The housing sector can act

as a ‘lead ‘ sector in the economy contributing to all round economic development

in the country. This aspect and potential of the housing sector is well recognized

by the government and as well as private sector as an opportunity.

Homebuyers in the country are still primarily debt averse and opt for external

funding only as a last resort. Economic development in Bangladesh has brought

increased urbanization, which has also affected the profile of housing demand at

the macro level. Urban population is expected to increase further with a rise in the

urbanization levels and in population. This implies that demand for housing would

increase at a faster pace in urban area in the short to medium term as the

preference for debt as an acceptable means of funding becomes more popular with

people.

By sighting this business trend NCC Bank Ltd has introduce “Special Housing

Loan Scheme”. So far the market scenario there are other competitors in the

market. There are special housing finance providers: Like stating Owned HBFC

(Housing Finance Corporation), Delta Brac Housing (DBH), National Housing

Finance (NHFIL), IDLC and there are banks.

Loans allowed to the Bank Employees for purchase /construction of house shall be

headed Staff Loan (HBL-STAFF). Interest rate of this loan is at bank rate but

minimum @ 7% simple.

Operation Flow of The SHLS

Preliminary conversation between officer and client

Receiving documents

Obtaining opinion.

Obtaining reports from bank and referee.

Preparation of proposal.

Proposal checking.

Issuing sanction letter

Receiving sanction letter.

Mortgage of approved property.

Disbursement monitoring.

Recovery monitoring.


NCCBL

Chapter 58

Purpose Of the Loan

Purchase of house and apartment. House Construction. Extension work of the

House.

Eligibility to avail the loan

Service holder/Professional/ businesspersons having sufficient sources of income

to repay the loan are eligible for the loan. Bank considers the client’s income,

qualification, asset and loan exposure, value of security, savings history e. t. c.

Amount of the Loan

The limit of the loan amount is fromTk500. 000/= to 50,00,000/=. Branch has no

authority to sanction any amount of loan. Head office gives the full sanction.

The loan ratio is 70: 30.

Rate of interest & Other Charges

Interest rate- 13% P. A. subject to change with market situation. Penal Interest-

@1% per month will be charged on defaulted amount (Minimum Tk100/=).

Documentation charge- @ 1% of loan amount to be realized on acceptance of the

amount.

Validity

This scheme allows getting the long-term loan, 5 years to 15 years, which is

convenient to the client.

Mode of Disbursement

One can avail disbursement in one or more installments depending on status of the

equity and progress of construction. Disbursement will be made upon obtaining

satisfactory legal opinion and technical report on the project. Bank makes a

disbursement schedule. According to that schedule disbursement will occur. After

completing specific part bank go for inspection then disburse the amount.

Mode of Repayment

By monthly equal installment. For purchase of flat/house the client may enjoy

maximum 6 months grace period from the date of availing of the loan. Repayment

will start from the 7th month of availing the loan and the entire loan will be

adjusted within the validity period. For construction of the building the client may

enjoy maximum 12 months grace period from the date of availing the loan.

Repayment will start from the 13th month of the loan and the entire loan will be

adjusted within the validity period.


NCCBL

Chapter 59

Security

Equitable mortgage of the proposed flat/House. For purchasing apartment or house

construction (Where individual gives the property to developer), in that case

tripartite agreement among bank, borrower and developer. Power of attorney to the

bank that, if borrower cannot repay the loan, ownership of the property transfer to

bank without court order. Post dated check covering the loan amount of the

borrower’s current account maintained with the financing branch to be deposited

in advance.

Necessary Documents For SHLS

Memorandum of deposit of title deed. Tripartite/Four partite agreement. D. P.

Note. Letter of arrangement. Letter of disbursement. Letter of guarantee. Letter of

authority to debit account of the borrower with incidental and other charges. Loan

agreement. Letter of undertaking. Letter of continuity. Irrevocable Power of

attorney

House Building Loan of NCCBL for 2000-2004


2000 2001 2002 2003 2004

204 220 238 375 429


204

220

238

375 429

0

50

100

150

200

250

300

350

400

450

Am

ou

nt

in m

illio

n T

aka

2000 2001 2002 2003 2004

Year

House Building Loan

Figure – 21


NCCBL

Chapter 60

5.3.4 Lease Financing

An entrepreneur, under this scheme, may avail of the lease facilities to procure

industrial machinery (without having to purchase it by down payment) with easy

repayment schedule. The clients also get special rebate in their income-tax

payment under the scheme.

Lease financing is one of the most convenient long term sources of acquiring

capital machinery and equipment. It is a very popular scheme whereby a client is

given the opportunity to have an exclusive right to use an asset, usually for an

agreed period of time, against payment of rent. Of late, the lease finance has

become very popular in almost all the countries of the world. An obvious

advantage of the lease is to use an asset without having to buy it. The lessee is

obligated to make lease payments until the expiration of the lease agreement,

which corresponds to the useful life of the assets. In a capital scarce economy like

ours, Lease Financing is suitable for firms to acquire Capital Machinery,

Equipments, Medical Instruments, and Automobiles etc. And thereby employ their

own resources more advantageously in some other investments. Lease financing

also helps a firm to reap significant economic benefit through tax saving and by

reducing the risk of the equipments becoming obsolete due to the technological

advancement.

Lease Financing of NCCBL for 2000-2004


2000 2001 2002 2003 2004

71 95 103 82 80


71

95 103

82

80

0

25

50

75

100

125

Am

ou

nt

in m

illio

n T

aka

2000 2001 2002 2003 2004

Year

Lease Financing

Figure – 16


NCCBL

Chapter 61

NCC Bank Ltd. has introduced the lease finance with the following objectives:

To assist the genuine and capable entrepreneurs for acquiring Capital Machinery

and Equipments to undertake enterprises without equity To encourage the new and

educated young entrepreneurs to undertake productive venture and demonstrate

their creativity and thereby participate in the national development. To participate

in the industrial development of the country.

Lease finance is utilized mostly in western country. The largest leasing industry’s

country is USA, where one third (1/3) of total business investment used by lease

finance. In the year 1986 investment of lease finance was 90 billion US Dollar in

USA. But in our country, lease finance was not that much popular ten (10) years

ago. Last 5-6 years, business people understood the usefulness of lease finance.

But, investment on this lease finance of NCCBL is not increased that mush. They

should give more attention to this prospective area of investment, from where they

can earn a handsome amount of interest but it is more secured. Because of the

ownership of lease items belongs to the bank.

5.3.5 Project Loan

NCC bank Ltd has their project loan scheme. Though they do not invest in project

loan extensively but now they are planning on project loan. Because project loan is

huge investment and it completely depends on success of the project for that

reason bank always keeps eye some major factor before invest on project loan.

Before invest on project loan Bank always who is the people involves in the

project. Security standard of the borrower. Then bank look for the feasibility report

of the project. Borrower has to completely show the feasibility report to the head

office. In the feasibility report borrower has to show the what the mission of the

project, who are the target customer, comparative analysis of the project with other

same project, how the project meets the demand of the target customer, for which

purpose the loan is asking for, detail information of the project operation, detail

price list of the equipment, approximate repayment planning by the borrower.

Branches do not have any authority to sanction any amount of loan for project

loan. Branch can only asses the project feasibility, evaluate the client check the

necessary papers and collect it from the client. After getting all the necessary

papers branch makes a proposal for the loan and send it to the head office. Head

office then re-evaluate the proposal with necessary papers. Then head office again

inspects the project. After getting all the evaluation head office then send the


NCCBL

Chapter 62

sanction letter to the branch. Loan amount then disburse from the branch. Branch

has to do the regular monitoring until the whole loan amount is repaid.

Detail information of project Loan

Name and address of the client

Particulars of the directors (Directors percentage of the share in the project)

Detail of the approved facility

Nature of the facility- Term loan

Amount of sanctioned loan

Purpose of the loan – for which specific reason client wants the loan e. x-for

purchasing machinery.

Rate of interest-16% par Annum, at quarterly rest, subject to change from time to

time

Grace period- after disbursement installment will not count from the following

month. After completing the project installment period will be count from that

month in which month the project is complete and start its operation.

Validity of the loan-means how long it will take to repay the loan.

Mode of adjustment- usually for project loan installment count quarterly, because

of bulk of installment. According to the loan amount bank calculates how many

installments needed for the repayment of the loan amount and how many years

takes for the repayment, including the grace period.

Security of the facility-

Primary security- for this sort of security bank takes the hypothecation of existing

facility against which the loan is taken.

Secondary Security- For this security bank takes land or fixed assets as collateral.

Personal guarantee of the directors of the company jointly and severally

First charge on the company’s asset & book debts to be created with the registered

of joint stock companies

Registered irrevocable general [power of attorney to be obtained from the

mortgagor /borrower to sell the mortgaged properties, intervention of the court

Usual charge documents as per bank’s credit norms

Necessary Documents for the Project Loan

Tax Identification Number (TIN). Certificate. CIB (Customer Information Beauro)

response form. Party’s application. Credit proposal and approval form. List of

collateral securities. Feasibility report. Trade license. Memorandum & Articles of

the association. Resolution. Net worth calculation of business & individual. Legal


NCCBL

Chapter 63

opinion. Valuation assessment. Quotation. Deed of lease agreement. CIB inquiry

form 1, 2 and 3

This is also an important instrument of term loan. This Scheme covers the

following areas - Plastic Industry, Medical service provider etc. The special

characteristic is – this type of loan innovates only for a particular project, as I

mention above. Few years ago it was not so much popular. But now a day it is

playing in an important role, who wants set up those projects which will be able to

serve the society side by side to the nation. Interest rate of project loan of NCC

Bank is @ 14%.

Project Loan of NCCBL for 2000-2004


2000 2001 2002 2003 2004

157 143 314 118 179


157

143

314

118 17

9

0

50

100

150

200

250

300

350

Am

ou

nt

in m

illio

n T

aka

2000 2001 2002 2003 2004

Year

Project Loan

Figure-22

5.3.6 Transport Loan Scheme

NCC Bank Ltd was an investment company before the conversion in a bank. So

they have good idea about lease financing. Transport loan is fallen under the lease

financing, though it is called transport loan but it is actually fallen under leasing

term and condition. NCC Bank Ltd does not have any car loan scheme for

individual clients, they had this scheme but the scheme is completely stopped for

the time being.


NCCBL

Chapter 64

Process of transport loan is more or less similar to project loan. Borrower has to

apply for the loan in prescribed bank application form. In the application form

borrower must mention which vehicle he wants to buy and what’s the quantity.

Borrower also has to provide detail price list of the vehicle, insurance paper for

each vehicle, possible repayment planning of the loan; list of collateral, list of

hypothecation of securities and other necessary papers depends on clients and

number of vehicles. After getting all necessary papers and field inspection branch

makes a proposal for the loan and send it to the head office. Head offices then

again checks the necessary papers and do the field inspection. After inspection if

Head Office thinks that for sanction of the loan they need more papers and

securities, borrower has to provide those papers. Branches usually do not have any

authority to sanction any amount of loan amount branch only disburse the amount

and do the regular monitoring whether the vehicle is purchased, is they quotation

match with the real one, vehicle is in the route and more importantly borrower is

repaying the installment regularly.

Detail Information Of Transport Loan

Name and address of the borrower &Company

Nature of limit-Loan (Transport)

Purpose of the loan-To procure vehicle for industrial or local transport.

Nature of business of the borrower-Transport business.

Amount of the limit- the loan amount

Margin- 50% cash against each vehicle

Debt-Equity ration-50: 50(Bank cash50% and Party cash 50%)

Validity-No of months (Calculated by the by the bank how many months it will

take to repay the loan against each vehicle) from the date of disbursement against

each vehicle.

Rate of interst-16% per annum, at quarterly rest, subject to change according to

market situation.

Mode of disbursement-The loan to be preferably disbursed after getting of vehicle.

If advance payment is considered as sine-qua-non the payment to be made direct to

respective seller through payment order after realizing party’s full equity with

instruction to deliver the vehicle to the bank’s representative. All other costs

insurance premium, route permit etc. to be borne by the borrower. Sale receipt to

be issued in the name of Bank account party.

Mode of repayment-from daily bus fare proceeds & minimum of certain amount of

money against each vehicle & balance if any lump sump amount within


NCCBL

Chapter 65

validity. Repayment starts from the second months from the date of disbursement

of loan against each vehicle.

Security-

A) Usually bank prefer pledge of FDR (Or any other financial obligation that the

party has in the bank) against each vehicle (Minimum Tk 1. 00 lac) and also

additional FDR for certain amount of money.

Hypothecation of vehicles duly registered in the name of the bank (1st party) and

the borrower under supervision of bank official duly complying all the formalities

of registration with motor vehicle department with comprehensive insurance cover

in the name of bank and borrower at borrower’s cost.

If the client default s payment of two consecutive installments, the loan will be

recalled with up to date interest immediately duly notifying.

The bank official will inspect the vehicle at every month interval to see that the

vehicles are on route.

The vehicle under this limit must bear the word prominently on it’s body as” This

Vehicle Is under The Credit Limit Of NCC Bank Ltd (Mirpur Branch)”

Excess over limit is strictly prohibited even after accrual of quarterly interest.

Balance confirmation must be obtained regularly on the 30th June and 30th

December of each calendar year.

Before disbursement borrower has to sign in the sanction letter of the head office

to declare that he is accepting the term and condition.

Bank has right to cancel, alter, amend the terms and condition.

The borrower must avail the loan two months from the date of communication for

sanction; otherwise the loan will be cancelled.

Necessary Documents For Transport Loan

CIB (Customer Information Bearue) response form, Party’s application, CIB

inquiry form 1, 2 and 3. D. P. Note. Letter of disbursement, Letter of arrangement.

Letter of authority, Letter of hypothecation, Letter of lien.

Transport Loan of NCCBL for 2000-2004


2000 2001 2002 2003 2004

77 63 49 44 46



NCCBL

Chapter 66

77

63

49 44 46

0

20

40

60

80

100

Am

ou

nt

in m

illio

n T

aka

2000 2001 2002 2003 2004

Year

Transport Loan

Figure-23

5.3.7 Other Loans

Last two years ago NCC Bank introduced some other loan namely “Consumer

Finance Scheme, Small Business Loan, House Renovation Loan, Personal Loan,

Agriculture Loan, Festival Loan” etc. These loan schemes already well accepted

by the household individuals and entrepreneurs of small business. As a result

investment on other loan increased at alarming rate. In the year 2000-2003 it was

Tk. in million 175, 140, 62, 228 respectively. But in the year 2004 it was Tk. in

million 2636. According to growth of this other loan, we can say, NCCBL’s

authority took an excellent decision.

Other Loan of NCCBL for the year 2000-2004


2000 2001 2002 2003 2004

175 140 62 228 2636

Source: Annual Report 2004-2000

Table – 28 Other Loan


NCCBL

Chapter 67

175

140

62

228

2636

0

500

1000

1500

2000

2500

3000

Am

ou

nt

in m

illio

n T

aka

2000 2001 2002 2003 2004

Year

Other Loan

2000

2001

2002

2003

2004

Figure – 32: Other Loan

Consumer Finance Scheme

The Scheme aims at improving the standard of living of the fixed income group.

Under the scheme the clients may secure loan facilities at easy installments to

procure household amenities

5.3.7.1 Small Business Loan Scheme (SBLS)

NCC Bank Ltd has introduced this loan for small businessman and for

entrepreneur. This loan actually is given fore smooth running of the business not

for starting a new business. Borrower must have to a savings bank account and a

current bank account to show that he has good transaction with the bank. Any

small businessman who has his own shop can apply for the loan. Businessman who

does not have own shop they can take loan but in that case landlord must be one of

the guarantor and borrower has to show that he has an agreement with the landlord

in terms of rental of the shop. Borrower has to apply to bank with bank’s

prescribed application form with necessary papers. Bank then inspects the shop

against which the borrower has applied for the loan. After the inspection branch

makes a proposal and send it to the head office for the sanction. The limit of small

business loan is Tk100, 000/= to 500,000/=. Branch can highest approve up to Tk

100,000/=, after 100,000/= branch has to take sanction from the head office.

Detail Information Of Small Business Loan

1. Name and address of the shop & owner

2. Amount of loan


NCCBL

Chapter 68

3. Purpose of the loan- for smooth operation of the shop, enlarging of the

existing business etc.

4. Rate of interest-

i. 16% per annum at quarterly rest subject to change

ii. Penal interest at the rate of 1% per month will be charged on

defaulted amount (Minimum Tk100/=)

5. Other Charges-

i. Service/processing charge @1% of the amount of sanctioned to be

recovered at the time of disbursement

ii. Risk fund @1% minimum TK500/= only shall be realized once at the

time of disbursement.

6. Period of time- after calculating the monthly installment, how many years it

will take to repay the whole loan amount.

7. Mode of repayment- By equal monthly installment calculated by the bank,

starting from the second month of availing of the loan. Monthly installment

has to be deposited by the tenth day of the following month. If any three

installments are not paid, penal; interest will be charged on defaulted

amount.

8. Monthly stock report dully filled by the borrower and signed by an officer

of the branch after physical verification to be obtained.

9. The borrower will allow the bank official to inspect the shop/business at

any time.

10. The borrower will neither sell nor transfer the ownership of the business

/shop until bank’s dues are fully paid and without prior written

permission/NOC from the bank

11. Security-

i. Hypothecation of stock all goods, product, machinery of the shop.

ii. Simple deposit of original title deed of the ownership of the shop

iii. Bank takes post-dated check of installment amount from the borrower.

Number of installment=Number of check.

iv. Personal guarantee (On bank’s prescribed guarantee form with adhesive

stamp of TK150/=). Spouse will be the guarantor if the borrower is a

married person.


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Chapter 69

Necessary Documents For Small Business Loan

Letter of arrangement. Letter of disbursement. D. P. Note . Letter of hypothecation

. Letter of revival. Valid trade license . Guarantee bond on TK150/= adhesive

stamp as per bank’s prescribed format from two guarantors acceptable to the bank.

Declaration on non-judicial stamp that borrower cannot transfer the owner ship of

the shop until bank’s dues are fully paid. And if the borrower cannot repay the loan

bank will take physical possession of the shop and dispose the off the shop in a

suitable manner. Undertaking to pay monthly installment regularly.

5.3.7.2 Personal Loan Scheme (PLS)

Personal loan scheme is one of the most successful products now days in private

banking sector, because the amount is not so big like project or transport loan.

NCC Bank Ltd also has personal loan scheme. Salaried person from any job can

apply for the loan. This loan is actually applicable for personal purpose like buying

home appliance, expenditure for marriage ceremony. Treatment, study these sort

of personal purpose. Only criteria for apply this loan is borrower must be salaried

person, must have a savings bank account, and he or she have to have a provident

fund. Process for this loan is very simple after applying branch makes an

inspection then makes a proposal and send it to the head office for sanction. Range

of this loan is Tk 10,000/= to 100,000/=. Branch can highly approve up to Tk

25000/=. After the limit of Tk25, 000/= branch has to take sanction from the head

office.

Detail Information Of Personal loan Scheme

1. Name and address of the borrower

2. Amount of loan

3. Purpose of the loan- marriage, study, treatment or buying home appliance.

4. Rate of interest: 16% per annum at quarterly rest subject to change.

5. Penal interest at the rate of 1% per month will be charged on defaulted

amount (Minimum Tk 100/=)

6. Service/Processing charge @1% of the loan sanctioned to be recovered at

the time of disbursement.

7. Risk fund @1% of minimum Tk 500/= shall be realized once at the time of

disbursement.

8. Mode of disbursement: the loan amount will be credited to the borrower’s

saving account maintained with branch by debiting his loan account.


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Chapter 70

9. Mode of repayment: By monthly equal installment to be deposited from the

following month of availing of loan. Monthly installment ha to be deposited

by 10th day of the following month. If any three installments are not paid

penal interest will be charged.

10. Validity: Minimum Six months and maximum three years.

11. Security: No of post dated check of the installment amount.

i. Personal guarantee of guarantor (Bank’s prescribed guarantee form

with adhesive stamp of Tk 150/=)

ii. Personal guarantee of spouse of the borrower

iii. Letter of authority to mark lien on the provident fund and gratuity of

the borrower

iv. Letter of confirmation from the salary disbursing committee.

Necessary Documents For Personal Loan Scheme

Salary certificate, provident fund must be lien. Salary certificate of the guarantor.

D. P. Note. Letter of arrangement. Letter of disbursement. Letter of guarantee.

Letter of authority to debit account of the borrower with incidental and other

charges. Letter of revival.

5.3.7.3 Home Renovation Loan Scheme (HRLS)

Home renovation loan is one of the innovative products of NNC Bank Ltd. This

loan only for those borrower who just complete the construction of the full

building but still there are some work left like plaster of the building, fitting of the

3rd floor of the building, or someone just want to renovate his home but he needs a

small amount of loan they can apply for the loan. Processing is as simple as small

or personal loan. Borrower has to apply for the loan in a bank’s prescribed form

with photograph of the building. Branch then go for the field inspection to check

whether the loan is actually needed. After completing the field inspection branch

makes a proposal for the sanction of head office. Head office just checks the

papers and send the sanction to the branch. Loan amount will be disbursed from

the branch. The range of the loan is from Tk100, 000/= to 500,000/=. Branch can

only approve up to Tk 100,000/=, above the branch limit branch has to get sanction

from the head office.


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Chapter 71

Detail Information Of HRLS

1. Name and address of the applicant.

2. Amount of loan- Tk100, 000/= to 500,000/=

3. Purpose of the loan-Repairing, renovation of the home.

4. Rate of interest-

i. 16% per annum at quarterly rest subject to change.

ii. Penal interest at the rate of 1% per month will be charged on

defaulted amount (Minimum Tk 100/=).

iii. Service/Processing charge @1% of the loan sanctioned to be

recovered at the time of disbursement.

iv. Risk fund @1% of minimum Tk 500/= shall be realized once at the

time of disbursement.

5. Mode of disbursement- the loan amount will be divided in to small part and

the disbursement of the amount will be occurring according to that disburse

schedule. Second installment will be released after being fully satisfied that

the first installment has been properly utilized.

6. Mode of repayment-By monthly equal installment. Repayment of the

installment will be start after the grace period. Monthly installment has to

be deposited by the 10th day of each following month. If any three

installments are not paid, penal interest will be charged.

7. Security-

i. Equitable mortgage by way of simple deposit of original title deed

with chain of documents of the borrower’s property owned by

applicant or wife. Borrower has to give the full schedule of the

property with detail schedule of the land and building.

ii. Post dated check covering the loan amount of the borrower’s current

account maintained with the financing branch to be deposited in

advance.

iii. Personal guarantee of guarantor (Bank’s prescribed guarantee form

with adhesive stamp of Tk 150/=)

iv. Personal guarantee of spouse of the borrower.

v. Letter of undertaking to pay monthly installment regularly.

8. The repairing /renovation work must be done within the premise as per

estimate submitted by the party with the application

9. Borrower has to repay the loan though he cannot complete the work for

natural calamity or sanctioned amount cannot cover the work.


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Chapter 72

10. Borrower can not sell, transfer or gift until bank’s dues are fully paid and he

will allow the bank’s official to visit the site anytime.

Necessary Documents For HRLS

Equitable mortgage by way of simple deposit of original title deed with chain of

documents of the borrower’s property owned by applicant or wife. Borrower has to

give the full schedule of the property with detail schedule of the land and building.



charges. Letter of revival.

5.3.7.4 Festival Small Business Loan Scheme (FSBLS)

This is one of the innovative products of NCC Bank Ltd. The main two factor of

this loan is this loan fully applicable for festival purpose and only for small

businessman. The requirement of loan is not very high but which have beneficial

effects for the small businessman who requires extra finance to stock the goods to

cope with market demand especially during the festival time (Eid-ul-Fitr, Eid-ul-

Azha, Durga Puza) to run their business smoothly. The disbursement/transaction

procedure for festival small business loan shall be is re-cycling order and

disbursement shall be stopped 15 days before the festival day and the disbursement

shall start before 1 month of festival.

Procedure For Application

Application in prescribed form dully filled in and by the applicant. Two passport

size photographs dully attested by an officer of the branch. Three dimension

photographs of the shop to be sent with the application. Recommendation by the

related business association or society or malik samity/ similar body.

Purpose

To help the genuine businessman having entrepreneurship quality and honesty to

meet the extra finance required during the festival. To enable the small business

community to do business with bank finance and increases their income. To

contribute towards development of socio-economic condition of the country.

Diversify bank’s lending keeping pace with the requirement of time.

Eligibility of the Clients

Any genuine small business man having 5 years of experience with small capital

but entrepreneurship quality with honesty, integrity and sincerity. Small business

wit no collateral or any other security to offer against the loan. The prospective

borrower must have a current account or will open a current account with


NCCBL

Chapter 73

the branch of the bank from where he wants to avail the loan. Doing business,

which is profitable in nature. Bank reserves the right to accept or eject any

application without assigning any reason.

Discretionary Power

Maximum amount of loan under this scheme will be Tk10. 00 lac for any small

businessmen for meeting the extra finance required during the festival. Sanctioning

power has been delegated to

Managing Director: -Above Tk 500,000/= to 10,00,000/=

Branch Manager: - Up to Tk 500,000/=

Interest & other Charges-

Interest- @ 16% Per Annum. At quarterly rest, subject to change. Application

Fees- Tk 500/=

Disbursement period

Disbursement of the loan should be started before 3 months of festival and to be

restricted keeping at least 15 days time ahead of the festival.

Repayment Period

The loan to be repaid within 3 months of disbursement from the sale proceeds.

The money will be deposited in the loan account from the daily sale proceeds,

which will be started immediately after disbursement. The loan shall be adjusted

including interest within 15 days after the festival pr earlier.

Security

Personal guarantee in bank’s prescribed format to be obtained from two

respectable person of society acceptable to the bank. Hypothecation of the stock in

trade. Post dated check covering the loan amount of the borrower’s current account

maintained with the financing branch to be deposited in advance. An undertaking

by the borrower in Bank’s prescribed formant to repay the loan in time.

Necessary Documents For FSBLS



charges Up to date trade license. Letter of hypothecation. Simple deposit of

possession deed /agreement or ownership deed of the shop or any other security

acceptable to the bank. Simple deposit of lease deed of agreement with personal

guarantee of the landlord in case of rented premises.


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Chapter 74

5.3.7.5 Festival Personal Loan Scheme (FPLS)

In our country or in the sub-continent culture religious festival is one of the biggest

occasions for the whole year. No matter what the financial situation everyone just

wants to involve in those occasion. So this is a big occasion for businessmen for

their business purpose and also individual for the festival.

Salaried person of our country cannot fulfill demand from their fixed income at the

time of festival (Like Eid-ul-Fitr, Eid-ul-Azha, Durga Puza). During the festival

they require to meet up their expenses. In order to cater to such emergent needs of

the service holders, NCC Bank Ltd has introduced this new scheme.

Procedure Of Application

Application n bank’s standard formant duly filled in and signed by the applicant.

Two recent passport size photographs duly attested by an officer of the bank.

Employer’s certificate stating the net salary (after all deduction) of the applicant.

Purpose

To met emergency financial expenses of the service holders at the time of festival

i. e. Eid-ul-Fitr, Eid-ul-Azha, Durga Puza)

Eligibility Criteria of the applicant

Any permanent salaried officer/ employee aged between 20 to 50 years and

working in any of the following officer to get loan under the scheme: Government,

Semi-Government Autonomous organization Corporate bodies Insurance

companies Teachers of university, college and school Multinational Companies.

Discretionary Power

Maximum Tk 15000/=. Branch manager can approve up to highest limit of the

loan.

Period Of Loan

Minimum 6 months, but not exceeding maximum 15 months.

Interest & Other Charges

Interest- @16 % P. A. at quarterly rest, subject to change

Penal interest-@ 1% per month on the defaulted amount of installment but not less

than Tk 100/=

Application Fees- Tk 100/=

Repayment Period

Minimum 6 months and maximum 15 months. Principal amount and interest

thereon is recoverable in equal monthly installment out of the salary of the

borrower from the following month of availing of the loan. The monthly


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Chapter 75

installment shall be fixed according to the tenure of the loan limit, which is

variable on case-to-case basis.

Security

Letter of authority to mark lien on the applicant’s provident fund, gratuity.

Post dated check covering the loan amount of the borrower’s current account

maintained with the financing branch to be deposited in advance.

Guarantee bond on bank’s prescribed format on Tk150/=non-judicial stamp.

Guarantee on bank’s standard format from the spouse of the borrower.

Necessary Documents For FPLS

D. P. Note. Letter of arrangement. Letter of disbursement Post dated check

covering the loan amount of the borrower’s current account maintained with the

financing branch to be deposited in advance. Letter of confirmation from the salary

disbursing authority. An undertaking to repay monthly installment regularly in

bank’s prescribed form.

5.4 Non-performing loan:

Loans are designated as non-performing when they are placed on non-accrual

status or when the terms are substantially altered in a restructuring. Non-accrual

means that banks deduct all interest on the loans that was recorded but not actually

collected. Banks have traditionally stopped acquiring interest when debt payments

were more than 90 days past due. However, the interpretation of when loans

qualified as past due varies widely. Many banks did not place loans on non accrual

if they were brought under 90 days past due by the end of the reporting period.

This permitted borrowers to make late partial payments and the banks to report all

interest as accrued, even it was not collected. On occasion, banks would lend the

borrower the funds that were used to make the late payment.

The impact of this practice on financial statements is twofold. First, non-

performing loans are understand on the balance sheet, so that credit risk is actually

higher than it appears. Second, interest accrued but not collected increase net

interest income, thus overstating NIM, ROA, and ROE.

Volume of non-performing loan of NCCBL for the year 2000-2004

(Taka in Million)

2000 2001 2002 2003 2004

865. 11 1067. 06 1234. 14 1253. 35 1188. 40

Table – 22 Annual Reports 2000-2004


NCCBL

Chapter 76

86

5.1

1

10

67

.06

12

34

.14

12

53

.35

11

88

.4

0

300

600

900

1200

1500

Ta

ka

in M

illio

n

2000 2001 2002 2003 2004

Year

Volume of Nonperforming Loan

Figure-24

From the above figure we can see that NCCBL’s non-performing loan amount

increased day by day. But it doesn’t show the real picture. Because, the total loan

and advances increased then non-performing loan also increased over the

preceding year. So, now we should concentrate on the percentage of non-

performing loan against total loan and advances.

Ratio of Non-Performing Loan and Total Loan and Advances

TK In million

2000 2001 2002 2003 2004

10. 86% 9. 89% 9. 39% 9. 75% 7. 81%

Table – 23 Annual Reports 2000-2004

Non-Performing Loans as % of Total Advances

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

2000 2001 2002 2003 2004Year

% o

f T

oa

tal A

dv

an

ce

s

Figure – 25


NCCBL

Chapter 77

Though the amount of non-performing loan was healthier over the last five (5)

years, but if we follow the graph we can see that it declined year to year. That

means in the year 2000- 2004 amount of non-performing loan was Tk. 865.11,

1067.06, 1234.14, 1253.35 and 1188. 40 million respectively, but it was 10.86%,

9.89%, 9.39%, 9.75% and 7.81% respectively of total loan and advances. Amount

of non-performing loan increased but percentage of non-performing loan

decreased. It indicates, NCCBL’s personnel recovered those loans efficiently.

That’s why this non-performing loan ratio represents a declining graph, which is

the ultimate goal of every financial institution.


NCCBL

Chapter 78


NCCBL

Chapter 79

Foreign Exchange System of NCCBL

____________________________________

6.1 Foreign Currency Deposit Accounts

6.2 Export

6.3 Import

6.4 Foreign Remittance


NCCBL

Chapter 80

6.1 FOREIGN EXCHANGE

International trade constitutes the main stream of business activities of NCCBL.

NCCBL offers a full range of trade finance and services namely, issue, advice and

conformation of Documentary credit; offering and arranging forward exchange

rate, pre-shipment and post-shipment finance, negotiation and purchase of export

bills, discounting bill of exchange, collection of bills, inward and outward

remittances etc. NCCBL is also a member of SWIFT & MONEYGRAM.

Researcher worked here first of his internship program. From 20/11/2005 to

19/01/2006. Researcher have learned the activities of foreign exchange department

and help them to perform their daily affairs. Researcher have observed the

followings main Tasks of the Department:

Import Business

Export Business

Foreign Remittances

Import

Import is the process of purchasing goods from overseas. Import of goods into

Bangladesh is regulated by the ministry of commerce in terms of the import and

export(control) act 1950.

Incase of Import, the importers are asked by their exporters to open a Letter of

Credit. So that their payment against goods is ensured.

Letter of Credit ( L/C )

Letter of credit (L/C) is a payment guarantee to the seller by the buyer’s bank. It is

in fact, accredit contract whereby the buyer’s bank is committed (on behalf of the

buyer) to place an agreed amount of money at the seller’s disposal under some

agreed conditions. If the conditions of the credit do not require for presentation of

specified documents, it is called Clean Credit. On the contrary, if the presentation

of specified documents is obligatory, the credit is called a Documentary Credit.

Types of L/C

NCCBL deals with two types of L/C. These are: a) Sight L/C b) Deferred L/C.


NCCBL

Chapter 81

Parties to Letter of Credit

The following parties are involved to a letter of credit.

A). Obligatory parties

a). Applicant

The person or body (customer of the bank) who requests the bank ( opening

bank) to issue letter of credit.

b). Opening Bank / Issuing Bank

The bank that opens / issues letter of credit on behalf of the applicant /importer.

c). Advising Bank / Notifying Bank

The bank through which the L/C is advised to the beneficiary (exporter).

d). Exporter/ Seller/ Beneficiary

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

Usually they are the seller or exporter.

B). Optional Parties (incase of need)

a). Confirming Bank

The bank, which under instruction in the letter of credit adds their irrevocable

undertaking to that of the issuing bank. It is done at the request of the issuing

bank having arrangement with them. The confirmation constitutes a definite

undertaking on the part of confirming bank in addition to that of issuing bank.

b). Negotiating Bank

The bank that negotiates document and pays the amount to the beneficiary

when presented complying credit terms. If the negotiation of the documents is

not restricted to a particular bank in the L/C normally negotiating bank is the

banker of the beneficiary.

c). Paying Bank / Reimbursing

The bank nominated in the credit by the issuing bank to make payment against

stipulated documents, complying with the credit terms. Normally issuing bank

maintains account with the reimbursing bank.

Necessity of L/C

In Importer can purchase the goods directly up to the limit US$ 5000 from the

exporter without opening a L/C through Bank Draft. For releasing the goods from

the custom authority by the importer, bank will certify.


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Chapter 82

Necessary Documents

An account with NCCBL corresponding branch. Import Registration Certificate

(IRC). Tax Paying Identification Number (TIN). Proforma Invoice / Indent.

Membership Certificate. LCA (Letter of Credit Application) from duly attested.

One set of IMP form. Insurance cover note with money receipt. Others (if

required)

Accounting Procedure incase of L/C Opening

Customer A/C Dr

L/C Margin A/C Cr

Commission A/C on L/C Cr

VAT Cr

SWIFT Charge Cr

Foreign Courier Charge Cr

Stamp Cr

Securities and Printing Cr

Import Financing

The Bank allows credits to the importers in the following forms:

Loan against Imported Merchandise (LIM):

Allowed to retire documents and clear the consignment form the customs

Authority taking the goods under Bank’s Control.

Usually, importer fails to retire the documents in spite of repeated reminders of the

banker or the bank has to clear the goods imported under the letter of credit at the

request of the importer (borrower). In both the cases, whether the importer fails to

retire the documents or request for clearance of goods, the outstanding under PAD

or B/E is transferred to “Loan against Imported Merchandise (LIM)” account and

the overdue interest from the date of accompanying Bills of Exchange or

negotiating date to the date of transfer to LIM account is charged. At the time of

opening of letter of credit the banks obtain from the importer an arrangement on

stamped paper which provides for financing and, if necessary, clearance and

storage of goods by debiting importer’s account at their risk and responsibilities.

After clearance, consignments are taken delivery by the importer on full payment

of bank’s liability. Normally part delivery is not allowed while on LIM account.

When the importer in part desires the delivery, the LIM is converted into cash


NCCBL

Chapter 83

credit account retaining proper margin and executing charge documents, the

delivery is affected thereafter on obtaining pro rata payment.

Loan against Imported Merchandise (LIM) of NCCBL (2000-2004)


2000 2001 2002 2003 2004

930 1132 1425 891 503


Normally any sort of loan & advance increased, but here in LIM is not increased.

These figures indicate NCCBL is not encouraging the import financing. We know

that, interest income is the major part of bank’s income and the major part of

interest income come from the import or export financing. So, the NCCBL should

concentrate on this part of advance. The rate of interest on LIM @ 14.5%.

930 11

32 1425

891

503

0

300

600

900

1200

1500

Am

ou

nt

in m

illio

n T

aka

2000 2001 2002 2003 2004

Year

Loan against Imported Merchandise (LIM)

Figure- 18

Loan against Trust Receipt (LTR): Allowed to the importer to retire documents

and release the consignment from the customs authority against trust, receipt

keeping the gods under importer’s control.

Under this arrangement, credit is allowed to the importer to retire documents and

release the consignment from the customs authority against trust, receipt keeping

the goods under importer’s control. The rate of interest of NCCBL on LTR @

14.5%.


NCCBL

Chapter 84

Loan against trust receipt (LTR) of NCC Bank for the year 2000-2004 is –


2000 2001 2002 2003 2004

729 1115 1853 1906 1888


NCCBL’s LTR increased year to year. In the year 2000 it was 729 million but in

the year 2004 it was 1888 million. In our country most of the goods are imported.

That means, we spend a large amount of money in import financing. So, NCCBL

should be taken necessary step to continue this growth of LTR. 72

9 1115

1853

1906

1888

0

400

800

1200

1600

2000

Am

ou

nt

in m

illio

n T

aka

2000 2001 2002 2003 2004

Year

Loan against Trust Receipt (LTR)

Figure-19

Export

Foreign Exchange regulation Act, 1947 nobody can export by post and otherwise

than by post any goods either directly or indirectly to any place outside

Bangladesh, unless a declaration is furnished by the exporter to the collector of

customer or to such other person as the Bangladesh Bank (BB) may specify in this

behalf that foreign exchange representing the full export value of the goods has

been or will be disposed of in a manner and within a period specified by

Bangladesh Bank

Export section deals with two types of that are: a). Back-to-Back L/C, b). Export

L/C.


NCCBL

Chapter 85

Back-to-Back L/C

Back to Back L/C is a secondary L/C(New Import L/C) opened by the seller’s

bank based on the original L/C (Master L/C) to purchase the raw materials and

accessories for manufacturing of the export product(s) required by the seller.

Under the Back to Back concept, the seller as the beneficiary of the master L/C

offer it as security to the advising bank for the issuance of the second L/C. The

beneficiary of the Back-to-Back L/C may be located inside or out side the original

beneficiary’s country. Incase of a Back-to-Back L/C, the bank takes no cash

security (margin). Bank liens the Master L/C and the drawn bill is a Usance/ Time

bill.

Necessary Documents for Opening a Back-to-Back L/C

Master L/C, Valid Import Registration Certificate (IRC) and Export Registration

Certificate (ERC), L/C application and LCAF Duly filled in and signed. Proforma

Invoice or Indent. Insurance Cover Note with money receipt. IMP Form duly

signed.

Accounting Procedure of Back-to-Back L/C

At the time of arrival document, the following voucher are passed:

Customer’s A/C Dr

Commission on acceptance Cr

At the time of payment made, when fund is at hand, the following entries are

given:

Sundry Deposit Margin on acceptance Dr

Customer’s Cr

If the party is paid in foreign currency, B. C. rate is applied in this regard.

International Department takes the T. T & O. D rate. If the payment is made to ID

in local currency in national rate, ID follows T. T Clean Rate. When the party is be

paid, OD Sight rate is followed. When fund is not available, the following

Vouchers are to be passed:

OAP (Own acceptance Purchase) Dr

Customer’s A/C Cr


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Chapter 86

Exporter L/C

The other type of L/C facility offered by NCCBL is export L/C. Bangladesh

exports a large quantity of goods and services to foreign households. Readymade

textile garments (both knitting wove), Jute, Jute made product, Frozen shrimps,

Tea are the main goods that the Bangladeshi exporters export to foreign countries.

Garments sector is the largest sectors that the lion share of the country’s export.

Bangladesh exports about 40% of its readymade garments product to USA. Most

of the exporters who export through NCCBL are readymade garment exporters.

They open L/C in branch to export their goods, which they open against the import

L/C opened by their foreign importers.

Necessary Documents for Opening a Export L/C

Export Registration Certificate (ERC), Bill of Exchange, Bill of Lading/ Airway

Bill/ Truck Receipt, Commercial Invoice, Certificate of Origin, Mate Certificate,

Packing List, Insurance Coverage, Beneficiary Certificate where the exporter tells

about the goods he wants to export

At last the exporters submits all these documents along with a letter of Indemnity

to the branch for negotiation. An officer scrutinizes all the documents. If the

documents are clean one, the branch purchases the documents on the basis of

banker-customer relationship. This is known as Foreign Documentary Bill

purchase (FDBP)

Accounting Procedure for FDBP

After purchasing the documents, the following entries are given:

Before realization of proceeds

FDBP A/C Dr

Customer’s A/C Cr

Adjustment after realization of proceeds

Head Office A/C Dr

FDBP A/C Cr

Local documentary Bills For Purchase (LDBP)

When export is done in local then importer opens a L/C in his bank (associating

bank). Importers import supplying Accessories from his supplier (exporter) and it

is done in deferred payment. Importer pays the payment by giving L/C to exporter.

But exporter needs cash payment as early so exporter takes cash payment


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Chapter 87

from his advising bank against the L/C. The advising bank finances the exporter

90% of the L/C value and takes 10% of the value of L/C as interest @ 15%.

Accounting Procedure for LDBP

Accounting entries are made for purchasing of local Bill are given bellow

LDBP A/C Dr

Party A/C Cr

Commission Cr

Interest A/C Cr

ECC & PC

NCCBL allows credits to the exporters to help performing their exports under the

following categories:

ECC: Allowed to provide with working capital for production of items of export

PC: Allowed to the exporter for packing the goods before shipment

Foreign Currency Deposit Accounts

A. Private FC Account

(i) Without prior approved of the Bangladesh Bank open foreign currency

accounts may be opened with us in the names of:

(a) Bangladesh Nationals residing abroad

(b) Foreign nationals residing abroad or in Bangladesh or in Bangladesh

and also foreign firms registered abroad and operating in Bangladesh or

aboard

(c) Foreign missions and their expatriate employees

Foreign exchange earned through business done or services rendered in

Bangladesh cannot be put into these accounts.

(ii) On the above foreign currency accounts maintained with us under this authority

we can pay interest or such accounts provided the accounts are maintained in

the form of term deposits for a minimum period of 90 days. Rates of interest

payable on such accounts should normally be comparable with the rates

available on similar accounts maintained abroad.

Bangladesh nationals working and earning abroad intending self-employed

Bangladeshi migrants proceeding abroad on employment may open


NCCBL

Chapter 88

foreign currency accounts even without initial deposits. They may open foreign

currency accounts with us even without initial deposits. They may operate the

accounts themselves or nominate other persons in Bangladesh for this purpose.

The account can be opened either in Pound Starling US Dollar, Deutsche Mark or

Japanese Yen or the option of the prospective account holder and maintained as

long as the account holder desires. Funds lying to the credit of FC accounts of

Bangladesh nationals can be utilized for import of goods and commodities as per

instructions issued by the CCI & E and Bangladesh Bank

Foreign currency accounts in the names of the Diplomatic Bonded Warehouse

(duty free shops) licensed by the Custom Authorities may be opened by us without

prior approval of the Bangladesh Bank or following conditions:

a) Convertible foreign currency (traveler’s Checks, Drafts, Checks or credit

card settlements) received only on account of sale of merchandise may be

credited to these accounts.

(b) Foreign exchange may be remitted abroad only for the purpose of

import of merchandise by bonded warehouses

(c) Monthly statement of purchase, sale and foreign exchange transaction

related thereto along with Bank certificate concerning encashment in Taka

shall be submitted to the Bangladesh Bank in prescribed form

Foreign currency accounts in the name of local and joint venture

contracting firms employed to execute projects by foreign

donor/international donor agencies may also be opened by us as per terms

of the approved contract without prior permission of the Bangladesh Bank.

Only foreign exchange received from the donors/donor agencies to meet

expenses in foreign of the project can be credited to these accounts. All

expenses in foreign exchange as per relevant contract may be met from

these accounts. These accounts should be closed as soon as the transactions

relating to the project are concluded.

Foreign nationals residing in Bangladesh are allowed to maintain and operate their

foreign currency accounts abroad.

Foreign currency accounts may be opened in the names of resident Bangladesh

nationals working with the foreign/international organizations operating in

Bangladesh provided salary is paid in foreign currency.


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Chapter 89

B) RFCD

Persons ordinarily resident in Bangladesh may open and maintain with us Resident

Forcing Currency Deposit (RFCD) accounts with forcing exchange brought in at

the time of their return from travel abroad. Any amount brought in with declaration

to Custom authorities in form FMJ and up to us $ 5000 brought in without any

declaration, can be credited to such accounts. However, proceeds of export of

goods or services in Bangladesh or commission arising from business deals in

Bangladesh shall not be credited to such accounts.

Balances in these accounts shall be freely transferable abroad. Fund from these

accounts may also be issued to account holders for the purpose of their foreign

travels in the usual manner (i. e. with endorsement in Passport and Ticket up to

USD 300/- in the form of Cash currency notes and the remained in the form of

TC).

These accounts may be opener in us Dollar, Pound, Staling, DM or Japanese Yen

and may be maintained as long as the account holders desire.

Interest in foreign exchange shall be payable on balances in such accounts. if the

deposits are for a term of not less than one month and the balance is not less than

USD 1000/- or $ 500/- or its equivalent. The rate of interest shall be 0. 25 present

less than the rate at which interest is paid on balance of back in their foreign

currency clearing accounts maintained with the Bangladesh Bank.

C) NFCD

NFCD account can be opened for a term of 1 month, 3month, 6month and 12

month in USD, GBP, German Mark, Japanese Yen or EURO Currency with any of

our AD branches. The minimum amount of deposit should be USD 1000. 00 or

GBP 500.00 or equivalent amount in other currency.

NFCD account can be operated or renewal basis up to an unlimited period. The

account holder can operate such account as long as he /she desires after the final

return from abroad. A non-resident Bangladesh national can also open an NFCD

account by deposit of foreign currency earned in foreign country within 6 months

from the date of his/her final return from abroad.

Interest will be accrued on the balances of foreign currency deposit in NFCD

account at the equivalent rate of interest applicable on EURO currency deposits.

Interest so earned on the NFCD balances will be tax-free.


NCCBL

Chapter 90

Balance of NFCD account in foreign currency can be remitted to any country

freely. This balance is also Convertible in BD Taka at the prevailing exchange

rate.

D) Wage Earners Bond

Non-resident Bangladesh nationals can remit their surplus earnings in foreign

currency to their home country for investment in the 5 years term Wage Earners

Development Bond in BD Taka.

Such Bonds can be purchased in denomination of Tk. 1,000/=, Tk. 5,000/=,

Tk10,000/=, Tk. 25,000/=, Tk. 50,000/=, and Tk. 1,00,000/=. These Bonds are

renewable and attractive rate of interest is allowed on this investment in BD Taka,

present rate of interest is 12% p. a. (w.e.f. 28-11-2000) and rate of interest to be

utilized in Bangladesh.

For premature encashment of the Bonds reduced rate of interest is applied. Death

risk insurance benefit is allowed on the Bonds of value Tk. 25,000/= and above.

Principal amount of the investment under this scheme can be frilly repatriated in

FC in foreign country.

Interest earner on the Wage Earners Development Bond is Tax Free in

Bangladesh.

E) NITA

Non-resident Bangladesh Nationals can open NITA account with any of our AD

branches for investment of their surplus earnings in foreign currency in the capital

market of Bangladesh by purchasing shares and securities.

Shares and securities form Bangladesh market can be purchase through stock

Exchange by using the balances of NITA accounts. Dividend earner on the shares

& securities and its sale proceeds can be deposited to NITA account. Entire

balance of the NITA account can be freely repatriated at any time in FC to foreign

countries at the existing exchange rates. Profit /dividend earned on NITA account

is income tax free.

NITA account can be operates through a nominee. The concern Bank maintaining

the account can also act as nominee.


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Chapter 91

F) Quota Account

i.) Merchandise exporters are entitled to a foreign exchange retention quota of

40% of repatriated F.O.B. value of their exports. However, for exports of goods

having high import content (low-domestic value added) like POL projects

including naphtha, furnace oil and bitumen, readymade garments made of

imported fabrics, electronic goods etc. the retention quota is 7.5% of the

repatriated value.

ii) Foreign exchange out of the retention quota may be maintained in FC accounts

with us in US Dollar, Pound Sterling, DM or Japanese Yen upon realization of

the export projects. Bangladesh in these accounts may be used by the exporters

for bonafide fussiness purposes, such as business visits abroad, participation in

export fairs and Seminars, establishment and maintenance of offices abroad,

import of raw materials, machineries and Spares etc. without prior approval of

Bangladesh Bank.

iii) Foreign exchange out of expertise’s retention quota may also be kept as interest

bearing renewable term deposit with the in US Dollar, Pound Sterling, DM or

Japanese Yen, with minimum amounts of such term deposits may be

determined in accordance with normal banking practice / normal banking

consideration. Interest or such deposits may be allowed at rates comparable to

the prevailing EURO deposit rates for the relevant currency.

Retention quota for service Exporters:

Service exporters may retain 5% of their repatriated income in foreign currency

accounts or as renewable time deposits in the same manner as renewable time

deposits in the same manner as mentioned about. Funds can be drawn from these

accounts to meet expenses for bona fide business travel abroad.

International Credit Cards may be issued to the exporters against foreign exchange

retention quota.

FOREIGN REMMITANCE

NCC Bank Ltd is the members of Money Gram and SWIFT networks. Using the

services of these global network, non resident Bangladesh nationals can send

money from abroad to their home country within a few minutes without any risk,

Besides Money Gram, NCCBL hase also arrangement with foreign money

exchange companies like U. S. E. Exchange Co. Redha-al-Ansari Co. etc. through


NCCBL

Chapter 92

which Bangladeshi expatriates can remit these money to their relatives in home

country very easily and safely using SWIFT network.

Remittance of NCC Bank Limited for last five (5) years (2000-2004)

(Amount in Million)

2000 2001 2002 2003 2004

259 275 287 279 348


259

275

287

279 34

8

0

75

150

225

300

375

Tk.

in M

illio

n

2000 2001 2002 2003 2004

Year

Remittance (2000-2004)

Figure-20

MoneyGram

Money Gram is represented in over 115 countries and is available at more then

25,000 locations worldwide. In the USA alone Money Gram is available at more

than 15,000 locations. Besides in the UK Money Gram is available through 1700

Postal Branches and 500 Thomas Cook travel shops making it the UK’s largest

money transfer network.

Finally using the Money Gram Service could not be simpler. All one has to do is to

visit a conveniently situated Money Gram agent anywhere in the world and hand

over the money they want to send their relatives or friends along with the one-off

transacting fee.

Sender completes a “Send” form and gets a Receipt. Money Gram Agent gives a

Ref. No. Which has to be passed to the Receiver.

Recipient the goes to NCC Bank Branch in Bangladesh. Fills out a “Receive” form

and show proper identification.

NCC Bank makers an inquiry on the Money Gram computer network to obtain

authorization to pay Recipient and Recipient receives the fund.


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Chapter 93

Money Gram is one of the fastest ways to transfer money. Customers using Money

Gram can send or receive money usually within 10 minutes from anywhere in the

world.

At NCC Bank we provide the Recipients immediate attention ad due care. We

have made it a point to pay the Recipient within minutes. The Recipients need not

require having a bank account. We do not levy any extra charge. We give a better

exchange rate to the Recipient. The Recipient can approach any for the NCC Bank

branches at his convenience for payment.

Society For Worldwide Inter bank Financial Telecommunication (SWIFT)

NCC Bank is a member of the society of inter bank financial telecommunication s.

c. r. l Through this fast, secure, global communication NCC bank has gained 24

hours connectivity with 7000 financial institution in 200 countries for transmission

of L/Cs, Guarantees, funs transfers, payment e. t. c. SWIFT is a bank owned non-

profit co-operative based in Belgium servicing the financial community

worldwide. It ensures secure messaging having a global reach of 6,495 Banks and

Financial Institutions in 178 countries, 24 hours a day. SWIFT global network

carries an average 4 million message daily and estimated average value of payment

messages is USD 2 trillion.

SWIFT is a highly secured messaging network enables Banks to send and receive

Fund Transfer, L/C related and other free format messages to and from any banks

active in the network.

Having SWIFT facility, Bank will be able to serve its customers more profitable

by providing L/C, Payment and other messages efficiently and with utmost

security. Especially it will be of great help for our clients dealing with Imports,

Exports and Remittances etc.


NCCBL

Chapter 94


NCCBL

Chapter 95

Accounting & Information System

of NCCBL

______________________________

7.1 Banking Transaction

7.2 Transfers

7.3 Office Accounts & Ledger

7.4 Accounting Treatment of Different Areas

7.5 Daily Activities Report as a Information System

7.6 Statement of Affairs

7.7 Schedule Bank Statistics

7.8 Notes of the Financial Statement of every year


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Chapter 96

According to the Companies Act. 1991 all the scheduled banks need to prepare an

income statement for the financial year ended and Balance sheet for stating the

affairs of business. Any bank registered in Bangladesh has to furnish the annual

report at the end of the year. All the financial Statement such as, Income

Statement, Cash flow statement, Balance Sheet etc. has to prepare in the annual

report.

Each Branch has to complete SBS-1, SBS-2and SBS-3 statements. SBS-1 is

prepared for monthly ands SBS-2 and SBS-3 are prepared for quarterly. These

statements show the assets and liability situation of every branch. The main

Branch collects and accumulates the information and sent them to the statistics

department. The bank maintains its accounts on double entry book keeping system

which investigates that every business transaction has a two-fold aspect, one

receive the benefit and other gives the benefit. This includes that for every debit

there is a correspondence credit.

7.1 Banking Transaction

The banking transaction is done in three ways. They are as follows: a) Cash

transaction b) Clearing c) Transfer.

a) Cash Transaction

When the transaction is made by cash they are called cash transaction. Cash is an

asset of the bank. That is why when the bank receives cash it is debited and

corresponding credit is made either by creating liability or a revenue etc.

b) Clearing

A customer of the bank may receive checks from others or issue a check to a

person who may place the check in his account with other bank. In this case the

customers account is credited or debited respectively and a corresponding advice is

issued to the clearinghouse to clear the checks.

c) Transfer

The transfer of an amount from one account to another dose not effect the cash

balance until cash is withdrawn by the transferor’s account is debited as he

receives money from the banker and the transferee’s account is credited as he

gives the money to the banker to lie in his account.

7.2 Office Accounts and Ledger

The individual accounts of the customer are maintained by the bank in computer

with the use of software. The daily deposit and withdrawals are given input in the

respective accounting showing the net amount receivable or payable by the

account holder.


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Chapter 97

The branch handles multifarious transaction everyday. These transactions are

classified under different heads such as assets, liabilities, income and expenditure.

All accounts are mentioned in the general ledger in computer. Certain registers are

maintained to do the accounting manually.

7.3 Some Accounting TreatmentsCash Deposit

Cash A/C DrParty A/c Cr

Cash Withdrawals

Party A/C DrCash A/C Cr

For TT:For example a TT is received from Agrabad branch.

IBTA Agrabad Branch DrBills Payable TT payable Cr

Bills Payable TT Payable DrParty A/C Cr

For DD:When a DD received without advice

Suspense A/C DD DrBills Payable DD Payable Cr

Bills Payable DD Payable DrIBTA H/O DD Cr

IBTA H/O DD DrSuspense A/C DD Cr

When only advice receive without DD

The advice DrBills Payable DD Payable Cr

For Clearing:Outward ClearingWhen any outward check received

Suspense A/C Clearing adjustment DrIBTA Cr


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Chapter 98

When any outward check passed or dishonored

IBTA DrDishonored check Dr


Suspense A/C Clearing adjustment DrParty A/C Cr

Inward Clearing:When any inward check received

Party A/C DrSuspense A/C Clearing adjustment Cr

When the checks are passed or dishonor

Suspense A/C Clearing adjustment DrIBTA CrDishonored checks Cr

For Outward bills for collection

IBTA DrParty A/C Cr

For loan disbursement interest charge & repaymentParty loan A/C Dr

Party CD or SD A/C Cr

Party loan A/C DrInterest Cr

Party CD or SD A/C DrParty loan A/C Cr

From L/C opening registerParty A/C Dr

Sundry deposit A/C Margin A/C CrIncome A/C Commission A/C CrVat Payable A/C CrIncome A/C Postage A/c CrIncome A/C SWIFT or Postage CrMiscellaneous Income A/C Cr

The margin requirement depends on the type of goods to be reported.

Customer’s liability A/C L/C foreign A/C DrBankers liability A/C L/C foreign A/C Cr


NCCBL

Chapter 99

When documents are received the party must accept it within three days.Bankers liability A/C L/C foreign A/C Dr

Bankers liability A/C L/C foreign A/C Cr

7.4 Daily Activities Report

Every branch has to prepare a daily activities report for every day. The Daily

activities shows the daily transaction profile, Daily current balance of individual

account and individual head wise posting.

7.5 Statement of Affairs

The statement of affairs is the statement of balance of

general ledger Accounts. This statement shows the daily

asset and liability position of the bank. Every bank has to

furnish this statement to the head office to inform their

asset and liability position. The statement includes the

general ledger code, general ledger description, detail

balance and group balance. The balance of the different

accounts must agree with the balances in the registers kept

manually.7.6 Schedule Bank Statistics (SBS-1, 2&3) Statement

As per requirement of Bangladesh Bank each And every branch needs to provide

statement of assets and liabilities in prescribed format. These formats are in printed

and every branch must comply with these formats.

SBS-1 is the monthly statement of assets and liabilities. This statement provides

information regarding sector wise deposits collection & loans and advances

sanction.

SBS-2&3 are quarterly statement of deposits and advances. Each and every bank

provides standing of deposit and advances in every three months to Bangladesh

Bank.

In SBS-2 the branch supplies information regarding quarterly deposits, foreign

currency deposits, wage earners deposits etc. In SBS-3 provides data about sector

wise advance sanctioned by the branch during the last quarter.

7.7 Notes of Financial Statements of Every Year

a) Basic of Accounting

The financial statements of the bank is prepared according to the Bank

companies Act.1991 and Bangladesh Accounting Standards on a going concern

basis under historical cost convention.


NCCBL

Chapter 100

b) Consolidation

All the financial statements is prepared by he records of the statement of

affairs, income and expenditure statement of the branch.

c) Investment

Investment in treasury bills is shown at face value, Prize bond at cost price and

shares at cost or market price which ever is lower. Interest on Investment in

Government and other trust securities, debentures and bonds etc. is accounted

for as income on accrual basis. Interest is calculated on daily product basis.

d) Loans and Advances

Normally loans and advances are stated at gross value. Provision for loan and

advances is made on basis of period end review by the management and of

instructions contained in Bangladesh Bank.

e) Fixed asset and Depreciation

Usually Fixed assets are stated at cost less accumulated depreciation.

Depreciation is charged at the annual rates prescribed by Bangladesh Bank as

noted bellow:

Furniture & Fixture:10%-20%, Machinery and Equipment-20% & Vehicles-

20%.

Depreciation at applicable rates is charged on additions to fixed assets as well

as on sale of any item on the basis of number of day in use of the concerned

asset.

f) Cash Flow Statement

Cash flow statement is prepared principally in accordance with ISA. Cash flow

statement and the cash flow form the opening activities have been presented

under direct method as prescribed by the securities and exchange rules 1987.

g) Off Balance Sheet Item

Usually under general banking transactions liabilities against acceptance,

endorsement and other obligations and bill against which acceptance is given

and claim exits there against is shown as off balance sheet item.

h) Foreign Currency Transactions

Transactions in foreign currencies are converted into equivalent taka currency

using the ruling exchange rates on the dates of such transaction. Assets and

liabilities as at year-end in foreign currencies are translated into taka currency

at the prevailing selling and buying rates of the concerned foreign currencies of

that day. The difference arising from the conversion is charged/ credited to the

profit and loss account.


NCCBL

Chapter 101


NCCBL

Chapter 102


NCCBL

Chapter 103

Conclusion & Recommendation

______________________________

8.1 SWOT Analysis

8.2 Recommendation

8.3 Conclusion


NCCBL

Chapter 104

8.1 SWOT Analysis of NCCBL

SWOT analysis is an important matter to know the present status of Strength,

Weakness, Opportunities and Threats of NCCBL. The analysis also helps the

company management to take relevant measure to make up its weakness and to

face the external threats of the competitors. The term SWOT includes the

following:

S- Strengths

W- Weakness

O- Opportunity

T- Threats

Now we shall discuss the strengths, weakness, opportunities and Threats in the

following paragraphs.

c) Strengths

NCCBL enjoy the following Strengths:

The banking service is easily accessible and feasible.

Banks are the only media through which international trade and

commerce emanate and entire credit transaction, both national and

industry.

Paid up capital of the bank is tk. 607.81 millions in 2004 as against tk.

552.55 millions of preceding year.

The reserve fund of the bank increased to tk. 425.22 millions in 2004 as

against tk. 336.12 millions of previous year, increase being 26%.

Deposit of the bank at the end of the year 2004 was tk.16069.23millions

registering an increase of 9% over previous year’s figure.

The advances growth of the bank is increasing rapidly.

The bank is a member of ATM network along with other ten banks

which enabled the bank to extend modern banking facility to the

customer.

The bank has been pleased to recommend 15% bonus share for the

shareholder.

The bank has already obtained principal membership of Master card and

visa credit card and MoneyGram which will be introduced in its product

line shortly.

d) Weakness

Lack of clearly defined marketing objectives.

Poor qualify of strategic management decision-making.


NCCBL

Chapter 105

Lack of promotional objectives and strategies.

Lack of implementing IT technology.

Lack of enough skill manpower.

Fund is getting costlier and getting access to the fund is also becoming

more difficult.

Number of branches are very limited.

Authorized capital of this bank remains unchanged in the year 2004s.

Absence of attractive remuneration package and motivation for the

employees.

The software MICRO-BANKER is not well protected. Such as it shows

the debit balance incase of current or savings deposit account. It never

gives notice of insufficient fund when more funds are debited in current

or savings account. Also the same problem incase of any contra

treatment.

e) Opportunities

In developing countries like Bangladesh, banking service would be the

only sources of financing.

They can diversify their portfolio by introducing new sectors like

leasing, introducing ATM card, one point service, tele banking, credit

cards etc.

The banking sector of Bangladesh is growing very fast.

The banking can also start micro-credit business for individuals and

small business like Grameen Bank.

In the near future all of the branches of NCCBL are going to be onlined

which is good news for the bank for bright future.

f) Threats

The most of the threats for the company are coming from the

competitors. Company has a chance to lose its market share to the

competitors if it dose not take necessary actions.

Opening of the recently permitted new banks, without implementation

of the needed reforms, could lead to unethical competition and house

trading in the country’s troubled banking sector.

The size of the market and the present state of economic activity did not

provide adequate scope for business for a large number of banks with

poor management and backdated operating system.


NCCBL

Chapter 106

The customer service of the bank is not too good like other banks. In the

Foreign banks, there are customer service department. But in this bank

there is no customer service department.

Online banks are providing more threats on the banks which are not yet

onlined like this bank.

In general banking department they follow the traditional banking system.

The entire banking procedure is not fully computerized.

8.2 Recommendation

As per earnest observation some suggestions for the improvement of the situation are

given bellow:

To attract more clients NCCBL has to create a new marketing strategy, Which

will increase the total export import business.

Effective and efficient initiatives are necessary to recover the defaults loans.

Attractive incentive package for the exporter will help to increase the Export

and accordingly it will diminish the balance of payment gap of NCCBL.

Long term training very much required for the bank officials

Computerized banking system and latest communication device are the most

important elements for this century. So, for the sound and stable banking

operation, NCCBL has to alternative but the modernization.

Foreign exchange operations of other banks are more dynamic and less time

consuming. NCCBL should take some initiative to complete with those banks.

Bank can provide foreign market report, which will enable the exporter to

evaluate the demand for their products in foreign countries.

The bank has to introduce online banking as soon as possible. Because its very

difficult to compete with other banks without online banking service.

Number of branches is very limited of this bank. They have to increase the

number of branches at various key points of the country.

8.2 Conclusion

The Overall Banking operation System of NCCBL is average satisfactory. This is due

to low technological modern banking system, unskilled officials, lack of promotional

activities, minimum motivational activities than other competitor banks, lack of

popular schemes. On the other hand the bank has excellent growth of deposit and

advances. The industrial, transport, and lease financing is also very little in this bank.

After all the bank already extending the ATM card & Credit card facilities which are

most popular at present age.


NCCBL

Chapter 107

Appendix 1: Questionnaire

Appendix 2: Consecutive 5 years Profit & Loss Account of NCCBL

Appendix 3: Consecutive 5 years Balance Sheet of NCCBL

Appendix 4: Consecutive 5 years Performance of NCCBL at Glances

Appendix 5: Acronyms used in this report

Bibliography


NCCBL

Chapter 108

Appendix One: Questionnaire

1. What is the name of the organization?

2. When is it established?

3. What is the mode of investment?

4. How many branches are available?

5. What is the position of capital structure?

6. What is the organogram of NCCBL?

7. What types of deposit are available?

8. What types of loan scheme are available?

9. What is the interest rate of different deposit scheme?

10. What is the interest rate of different loan scheme?

11. What is the position of different deposit scheme in different years?

12. What is the position of different loan scheme in different years?

13. What is the position of remittance in different years?

14. What is the procedure of different loans disbursement?

15. What is the procedure of opening different deposit account?

16. What is the procedure of opening L/C. LDBP?


NCCBL

Chapter 109


NCCBL

Chapter 110


NCCBL

Chapter 111


NCCBL

Chapter 112

Appendix Five: Acronyms used in this report

NCCBL National Credit and Commerce Bank Ltd.

ADB Asian Development Bank

ATM Automated Teller Machine

BCC Bank of Credit and Commerce

BCCI Bank of Credit and Commerce international

EPZ Export Processing Zone

FBP Foreign Bills Purchase

FDR Fixed Deposit Receipt

GD General Diary

GOB Government of Bangladesh

H/O Head Office

IBC Inward Bills for Collection

L/C Letter of Credit

LAN Local Area Network

LIM Loan against Imported Merchandise

LTR Loan against Trust Receipt

NGO Non-Government Organization

OBC Outward Bills for Collection

PO Pay Order

SSC Specimen Signature Card

SSI Small Scale Industries

STD Short Term Deposit

SWIFT Society for world wide Inter-bank Financial Telecommunication

SSS Special Savings Scheme

TIN Tax Identification Number

WAN Wide Area Network

NCBs Nationalized commercial banks

WES Wage Earner scheme

MIS Management information System

VWF Volume or working fund

CAD Central Accounting Division


NCCBL

Chapter 113

Bibliography

1 Annual Report of Financial Year 2000-2004, NCC Bank Limited

5 www.ncc-bd.com

6 www.bangladesh-bank.org


http://www.bangladesh-bank.org/

http://www.ncc-bd.com/

ais in ncc bank

Documents

general loan sector

advance nccbl

special loan scheme

loan schemes

success of nccbl

banking sector

general sector

general banking section