Letter of Transmittal

Date: 18 November 2008

To………………..

Subject: Submission of Report on Banking Industry in Bangladesh

Dear Sir,

Here I am submitting the report on “Banking Industry in Bangladesh” prescribed by you in your course Industrial Studies. For this Purpose, I have gone through internet, different books, articles, journals, interview of authorities and employees of the respective organizations and class lecture sheets for the relevant information of the assigned topic.

Please call me for any further information at your convenient time and place.

Yours truly,

…………………………….

Acknowledgement

At first I desire to express my deepest sense of gratitude to almighty Allah.

With profound regard I gratefully acknowledge our respected …………………………..for his generous help and day to day suggestion during preparation of the report.

I like to give thanks especially to our friends and many individuals, for their

enthusiastic encouragements and helps during the preparation of this report us

by sharing ideas regarding this subject and for their assistance in typing and proof

reading this manuscript.

Thanking You,

Md. Tanvir AhmedId: 233BBA: 5Faculty of BBACambrian Collage

Table of content

Executive summery

As the world grapples with the continuing pain of the financial crisis, an independent network of eleven banks will come together in Bangladesh to try to build a viable, sustainable future for the financial industry. Members of the Global Alliance for Banking on Values (GABV) believe that they can demonstrate that a brave new future for the banking industry is possible, and that their members are already delivering it.

The banks, from wealthy and developing countries around the world, intend to grow sustainable banking globally. They are spending three days near Dhaka, working together to build a capital raising programme, develop an education programme to develop a new breed of sustainable bankers to handle the money they raise, and agree how they will have a greater influence on the mainstream financial industry.

The GABV, which uses finance to deliver sustainable development for unserved people, communities and the environment, represents seven million customers in 20 countries, with a combined balance sheet of over $14 billion. It has announced an ambitious commitment to support the expansion of $2 billion in lending to green projects and underserved communities around the world. And all this, in a country which many experts believe will be hit hardest and earliest by the impact of climate change.

The GABV aims to raise $250 million in new capital by pooling the expertise and resources of its members. "Raising this money will result in $2 billion in new lending, at a time when credit continues to be scarce," said Peter Blom, Chair and co-founder of the GABV and CEO of Triodos Bank in the Netherlands. "The stakes are high. If we don't get people to listen, the potential impact for hundreds of millions of people in this part of the world alone, could be catastrophic. At the same time the opportunity is colossal. There is an enormous amount of positive work being done. A safe, sustainable future will only happen if we can develop a better financial system. Our network is collaborating to make that happen."

The banks operate in countries as diverse as Germany, Mongolia, Peru, and the US, and have weathered the financial storm with considerable success. According to Katrin Kaeufer, research fellow at the Massachusetts Institute of Technology (MIT), they share a number of characteristics that could be adopted more widely to build a sustainable world economy. "Many of these banks have continued to be successful during the downturn. Before we return to business as usual it seems sensible to examine why. There's no one secret, but these banks all have sustainability embedded in everything they do. They are transparent, values-driven institutions that promise a genuinely different future for banking."

Introduction

The banking industry in Bangladesh has flourished over the years, making double-digit profit percentages, sustaining growth and surviving cut-throat competition while providing attractive returns to shareholders. However, the greed for more without befitting platform and fundamentals, brings its own challenges and questions in people's minds. News about bank directors and chairmen's involvement in politics and underhand deals using banks' goodwill raises question about the banks' independence in running their operations. It also makes you think whether all the disclosures in the annual reports and other regulatory paperwork are only the glowing shell over a huge hollow. At the times of questioning myself whether excessive regulation is the reason behind the veneer of goodness or whether there are other regulatory malpractices, disconnects or deficiencies that allow these banks to take advantage of the situation. The image of the banking industry has many times been tarnished by several stories regarding the owners in recent media releases. Despite the considerable progress made, foreign countries are still somehow treating our banking industry activities as questionable. Countering the image issue is not the only block in the road to developing a respectable and successful institution, there are also the problems of 2 Ps 3Cs and a T-- people, product, compliance and ethics, competition, change management and technology among others. Though someone may differ, competition in Bangladesh seems to be the deadliest of all. It not only brings in positive developments but also encourages malpractice. There is competition not only from other banks but also from non-bank financial institutions (NBFI) and micro finance institutions (MFI). Not only are the institutions competing, the regulators and customers are also pitting one against the other, making the situation extremely difficult giving you the feeling of being stuck between a rock and a hard wall. A customer will often try to make the best out of the situation by not complying with the regulatory requirement, referring to the service provided by another bank or banks. The requirement of bankers to meet steep targets often results in succumbing to the demand of these corporates, resulting in bypassing of the regulation. One bypass results in another and then another resulting in a whole network of malpractices, which often becomes the norm. Competition in the banking industry is also hitting from the capital market end, with the corporates increasingly going to the equity market to raise funding. This not only hits the banks in the belly by affecting their core business but also indirectly affects their contribution to market cap which dropped from 59% in 2007 to less than 25% in June 2010. More importantly it forces them to risk their position by over exposing them to volatile capital market through proprietary trading and position taking in order to maintain profitability. All of us feel that the banking industry badly needs skilled human resources who will not only service old products but will also create and launch new innovative products. Educating the market remains the first requirement towards creating new products and developing skilled human resources. Besides people and product issues, you need to be ever vigilant about the ever-changing technology and regulatory requirements. The new offering in the market which has got all banks running are the requirements of BASEL II

& Automated Clearing House. The major challenge with change of regulation is that often the regulators are in a hurry to implement a sudden decision, rolling out action plans without proper research or understanding the broad implications and capabilities of the banks to comply with it. The outcome is delay in implementation, confusion among stakeholders and new techniques to bypass these regulations. This in its turn creates a non-level playing field for those who comply with the regulation versus those cleverly "managing" the situation without having to comply. Too much noise and less action, at times, creates doubt about the sincerity of the purpose. As a law-abiding citizen you wonder why it is so easy to "manage" non-compliance? The final question remains -- who is losing out by this? Ultimately, every citizen of the country, as our country suffers. The banking sector could be our pride and a major growth engine of the economy. Regulators are taking appropriate decisions to implement proper regulations at the right time. An appropriate example is when several financial institutions shifted towards the riskier capital market to counter the lower growth in their core businesses using the depositors money, the regulators aptly stepped in to make merchant banks separate subsidiaries. The regulations are there. The problem is enforcing them in an honest manner. If the regulators and the legal system were honest then all these recurring image issues and malpractices could have been avoided. Facing the challenges head-on in a compliant manner should be our goal towards creating a sustainable, profitable and forward-looking banking sector. We need to do more and run faster with clear visibility about the destination. Perhaps, it also has to do a lot with the overall governance and accountability situation in the country.

Objectives of the study

There are two types of objectives of this study. Both of them are being described below:

1. Primary Objectives :

The primary objective of this study is to understand tte current scenario in the garments industry in Bangladesh.

2. Secondary Objectives:

secondary objectives are….

To know briefly about a some garments companies of Bangladesh To identify what factors   are affecting the garments industry in Bangladesh To identify the performance of garments industry in Bangladesh

Limitations of the study:

Since our study is based on both primary and secondary data, there is a possibility of getting fake information. If the surveyed personnel provide us with any fabricated

information about their opinion of their organization, then the report findings may be erroneous. Above all, this study is weak in some points. The notable ones are as under:

The survey was conducted in a very short time so we were not able to collect more information.

This survey made on crisis situation of Bangladesh, so it was difficult to collect more samples.

Only the big and the reputed Garments Company consider here as sample. The questionnaire contains some questions that, if answered properly, might

damage the company’s image. In this type of questions, the respondents might provide socially acceptable answers. This risk was unavoidable.

Another limitation of this study is the person’s private information were not disclosing some, data and information for obvious reasons, which could be very much useful.

Lack of experience in this field. Lack of proper authority to conduct the interview program.

Scope of the Study

This study has focused upon the various problems regarding with the garments company and the prospect of these industries. We have taken 5 garments company to

gather data on the present situation of the garments industries as well as problem regarding and the future of the industries.

Background of the Industry

The Pakistani banking system at independence (14 August 1947) consisted of two branch offices of the former State Bank of Pakistan and seventeen large commercial banks, two of which were controlled by Bangladeshi interests and three by foreigners other than West Pakistanis. There were fourteen smaller commercial banks.

Virtually all banking services were concentrated in urban areas. The newly independent government immediately designated the Dhaka branch of the State Bank of Pakistan as the central bank and renamed it the Bangladesh Bank. The bank was responsible for regulating currency, controlling credit and monetary policy, and administering exchange control and the official foreign exchange reserves. The Bangladesh government initially nationalized the entire domestic banking system and proceeded to reorganize and rename the various banks. Foreign-owned banks were permitted to continue doing business in Bangladesh. The insurance business was also nationalized and became a source of potential investment funds. Cooperative credit systems and postal savings offices handled service to small individual and rural accounts. The new banking system succeeded in establishing reasonably efficient procedures for managing credit and foreign exchange. The primary function of the credit system throughout the 1970s was to finance trade and the public sector, which together absorbed 75 percent of total advances.[1]

The government's encouragement during the late 1970s and early 1980s of agricultural development and private industry brought changes in lending strategies. Managed by the Bangladesh Krishi Bank, a specialized agricultural banking institution, lending to farmers and fishermen dramatically expanded. The number of rural bank branches doubled between 1977 and 1985, to more than 3,330. Denationalization and private industrial growth led the Bangladesh Bank and the World Bank to focus their lending on the emerging private manufacturing sector. Scheduled bank advances to private agriculture, as a percentage of sectoral GDP, rose from 2 percent in FY 1979 to 11 percent in FY 1987, while advances to private manufacturing rose from 13 percent to 53 percent.[1]

The transformation of finance priorities has brought with it problems in administration. No sound project-appraisal system was in place to identify viable borrowers and projects. Lending institutions did not have adequate autonomy to choose borrowers and projects and were often instructed by the political authorities. In addition, the incentive system for the banks stressed disbursements rather than recoveries, and the accounting and debt collection systems were inadequate to deal with the problems of loan recovery. It became more common for borrowers to default on loans than to repay them; the lending system was simply disbursing grant assistance to private individuals who qualified for loans more for political than for economic reasons. The rate of recovery on agricultural loans was only 27 percent in FY 1986, and the rate on industrial

loans was even worse. As a result of this poor showing, major donors applied pressure to induce the government and banks to take firmer action to strengthen internal bank management and credit discipline. As a consequence, recovery rates began to improve in 1987. The National Commission on Money, Credit, and Banking recommended broad structural changes in Bangladesh's system of financial intermediation early in 1987, many of which were built into a three-year compensatory financing facility signed by Bangladesh with the IMF in February 1987.[1]

One major exception to the management problems of Bangladeshi banks was the Grameen Bank, begun as a government project in 1976 and established in 1983 as an independent bank. In the late 1980s, the bank continued to provide financial resources to the poor on reasonable terms and to generate productive self-employment without external assistance. Its customers were landless persons who took small loans for all types of economic activities, including housing. About 70 percent of the borrowers were women, who were otherwise not much represented in institutional finance. Collective rural enterprises also could borrow from the Grameen Bank for investments in tube wells, rice and oil mills, and power looms and for leasing land for joint cultivation. The average loan by the Grameen Bank in the mid-1980s was around Tk2,000 (US$65), and the maximum was just Tk18,000 (for construction of a tin-roof house). Repayment terms were 4 percent for rural housing and 8.5 percent for normal lending operations.[1]

The Grameen Bank extended collateral-free loans to 200,000 landless people in its first 10 years. Most of its customers had never dealt with formal lending institutions before. The most remarkable accomplishment was the phenomenal recovery rate; amid the prevailing pattern of bad debts throughout the Bangladeshi banking system, only 4 percent of Grameen Bank loans were overdue. The bank had from the outset applied a specialized system of intensive credit supervision that set it apart from others. Its success, though still on a rather small scale, provided hope that it could continue to grow and that it could be replicated or adapted to other development-related priorities. The Grameen Bank was expanding rapidly, planning to have 500 branches throughout the country by the late 1980s.[1]

Beginning in late 1985, the government pursued a tight monetary policy aimed at limiting the growth of domestic private credit and government borrowing from the banking system. The policy was largely successful in reducing the growth of the money supply and total domestic credit. Net credit to the government actually declined in FY 1986. The problem of credit recovery remained a threat to monetary stability, responsible for serious resource misallocation and harsh inequities. Although the government had begun effective measures to improve financial discipline, the draconian contraction of credit availability contained the risk of inadvertently discouraging new economic activity.[1]

Foreign exchange reserves at the end of FY 1986 were US$476 million, equivalent to slightly more than two months worth of imports. This represented a 20-percent increase of reserves over the previous year, largely the result of higher remittances by Bangladeshi workers abroad. The country also reduced imports by about 10 percent to US$2.4 billion. Because of Bangladesh's status as a least developed country receiving concessional loans, private creditors accounted for only about 6 percent of outstanding public debt. The external public debt was US$6.4 billion, and annual debt service payments were US$467 million at the end of FY 1986.[1]

Definition of the industry

A bank is a financial intermediary and appears in several related basic forms:

a central bank issues money on behalf of a government, and regulates the money supply

a commercial bank accepts deposits and channels those deposits into lending activities, either directly or through capital markets. A bank connects customers with capital deficits to customers with capital surpluses on the world's open financial markets.

a savings bank, also known as a building society in Britain is only allowed to borrow and save from members of a financial cooperative

Banking is generally a highly regulated industry, and government restrictions on financial activities by banks have varied over time and location. The current set of global bank capital standards are called Basel II. In some countries such as Germany, banks have historically owned major stakes in industrial corporations while in other countries such as the United States banks are prohibited from owning non-financial companies. In Japan, banks are usually the nexus of a cross-share holding entity known as the keiretsu. In Iceland banks had very light regulation prior to the 2008 collapse.

The oldest bank still in existence is Monte dei Paschi di Siena, headquartered in Siena, Italy, and has been operating continuously since 1472.[1]

The definition of a bank varies from country to country. See the relevant country page (below) for more information.

Under English common law, a banker is defined as a person who carries on the business of banking, which is specified as:[6]

conducting current accounts for his customers paying cheques drawn on him, and collecting cheques for his customers.

In most common law jurisdictions there is a Bills of Exchange Act that codifies the law in relation to negotiable instruments, including cheques, and this Act contains a statutory definition of the term banker: banker includes a body of persons, whether incorporated or not, who carry on the business of banking' (Section 2, Interpretation). Although this definition seems circular, it is actually functional, because it ensures that the legal basis for bank transactions such as cheques does not depend on how the bank is organised or regulated.

The business of banking is in many English common law countries not defined by statute but by common law, the definition above. In other English common law jurisdictions there are statutory definitions of the business of banking or banking business. When looking at these definitions it is important to keep in mind that they are defining the business of banking for the purposes of the legislation, and not necessarily in general. In particular, most of the definitions are from legislation that has the purposes of entry regulating and supervising banks rather than regulating the actual business of banking. However, in many cases the statutory definition closely mirrors the common law one. Examples of statutory definitions:

"banking business" means the business of receiving money on current or deposit account, paying and collecting cheques drawn by or paid in by customers, the making of advances to customers, and includes such other business as the Authority may prescribe for the purposes of this Act; (Banking Act (Singapore), Section 2, Interpretation).

"banking business" means the business of either or both of the following:

1. receiving from the general public money on current, deposit, savings or other similar account repayable on demand or within less than [3 months] ... or with a period of call or notice of less than that period;

2. paying or collecting cheques drawn by or paid in by customers[7]

Since the advent of EFTPOS (Electronic Funds Transfer at Point Of Sale), direct credit, direct debit and internet banking, the cheque has lost its primacy in most banking systems as a payment instrument. This has led legal theorists to suggest that the cheque based definition should be broadened to include financial institutions that conduct current accounts for customers and enable customers to pay and be paid by third parties, even if they do not pay and collect cheques.[8]

Nature of the Industry

Banks safeguard money and provide loans, credit, and payment services such as checking accounts, debit cards, and cashier's checks. Banks also may offer investment

and insurance products. As a variety of models for cooperation and integration among finance industries have emerged, some of the traditional distinctions between banks, insurance companies, and securities firms have diminished. In spite of these changes, banks continue to maintain and perform their primary role—accepting deposits and lending money.

Goods and services. Banking comprises two parts: Monetary Authorities—Central Bank, and Depository Credit Intermediation. The U.S. Federal Reserve System is the central bank of the United States and manages the Nation's money supply and international reserves, holds reserve deposits of other domestic banks and the central banks of other countries, and issues the dollars we use. The credit intermediation and related services industry provides banking services to consumers and businesses. It secures the money of depositors, provides checking and debit card services, and lends money to consumers and businesses through credit cards, mortgages, car loans, investment loans, and lines of credit.

Industry organization. There are three basic types of banks: commercial banks, savings and loan associations, and credit unions. Although some of the differences between these types of banks have lessened, there are key distinctions. Commercial banks, which dominate this industry, offer a full range of services for individuals, businesses, and governments. Commercial banks come in a wide range of sizes, from large global banks to mid-size regional and small community banks. In addition to typical banking services, global banks lend internationally and trade foreign currencies. Regional banks have numerous branches and automated teller machine (ATM) locations throughout a multi-state area and provide banking services to individuals and local businesses. Community banks are based locally and have fewer branches than regional or global banks. In recent years, online banks—which provide financial services entirely over the Internet—have entered the market, with some success. However, even in Internet banking distinctions have lessened as traditional banks also offer online banking, and some formerly Internet-only banks have opened branches.

Savings banks and savings and loan associations, sometimes called thrift institutions, are the second largest group of depository institutions. They were first established as community-based institutions to finance mortgages for people to buy homes and still cater mostly to the savings and lending needs of consumers. Over time, distinctions between savings banks and commercial banks have largely disappeared.

Credit unions are another kind of depository institution. Credit unions are formed by people with a common bond, such as those who work for the same company, belong to the same labor union, or live in the same county. Only people who have the common bond are allowed to become members. Loans and savings accounts are restricted to

members. Credit unions are nonprofit organizations that are governed by a board elected by the depositors (members).

Federal Reserve banks are Federal Government agencies that perform many financial services. Their chief responsibilities are to regulate the banking industry and to create and implement the Nation's monetary policy by controlling the money supply—the total quantity of dollars in the country, including cash and bank deposits. The Federal Reserve uses monetary policy to promote economic growth while limiting inflation. During periods of slower economic activity, the Federal Reserve may increase the money supply by purchasing government securities and other assets. The Federal Reserve also promotes economic growth by lowering the interest rate it charges banks for loans. Increasing the money supply and lowering the interest rate charged to banks that borrow money gives banks more money to lend and, hopefully, grows the economy. The Federal Reserve may attempt to fight inflation by selling its government securities or raising the interest rate it charges banks, thus reducing the amount of money banks can lend. Federal Reserve banks also perform a variety of services for other banks, including processing checks that are drawn and paid out by different banks.

Interest on loans is the principal source of revenue for most banks, making their various lending departments critical to their success. The commercial lending department loans money to companies; the consumer lending department handles student loans, credit cards, personal loans, and car loans; and the mortgage lending department loans money to individuals and businesses to purchase real estate.

The money banks lend comes primarily from consumer and business deposits in checking, money market, and savings accounts and certificates of deposit. These deposits often earn interest for their owners, and provide owners with payment methods, such as online bill payments, checks, and wire transfers. Deposits in many banks are insured and regulated by a US Government agency, the Federal Deposit Insurance Corporation (FDIC), which guarantees that depositors will get their money back, up to a stated limit, if a bank should fail. Deposits in savings and loan associations and credit unions are insured and regulated by other US government agencies.

Recent developments. Declining home prices were one cause of the recent financial crisis. As home values declined, many borrowers stopped paying (defaulted) on their home loans (mortgages.) With prices of houses declining and increasing rates of default, banks suffered large losses. Some banks suffered larger losses than other banks because they made riskier mortgage loans or owned mortgages concentrated in areas of the country with the largest housing price declines. Many banks with large losses were bought by other, stronger banks, or were taken over by the FDIC.

The financial crisis accelerated an ongoing fundamental change in the banking industry as banks diversify their services to become more competitive. The financial crisis has allowed stronger banks to buy other banks and companies that provide other financial services at lower prices than before the crisis. Some other financial services that many banks offer their customers include: financial planning and asset management services, brokerage services, and insurance services. Banks purchase companies that offer these services and still offer them through a subsidiary or a third party. The financial crisis also helped commercial banks increase their share of the investment banking industry. Investment banks help companies and governments raise money through the issuance of stocks and bonds. As banks respond to regulatory changes and other changes driven by the financial crisis, the nature of the banking industry will continue to undergo significant change.

Working Conditions

Hours. The average workweek for nonsupervisory workers in depository credit intermediation was 36.2 hours in 2008. About 8 percent of employees in 2008, mostly tellers, worked part time.

Employees in a typical branch work weekdays, some evenings if the bank is open late, and Saturday mornings. However, banks are increasingly expanding the hours that their branches are open and opening branches in nontraditional locations. For example, hours may be longer for workers in bank branches located in grocery stores, which are open most evenings and weekends. To improve customer service and provide greater access to bank personnel, banks have phone centers, staffed by customer service representatives. Employees of phone centers spend most of their time answering phone calls from customers and often work evening and weekend shifts.

Administrative support employees normally work in large processing facilities in the banks' headquarters or other administrative offices. Most support staff work a standard 40-hour week; some may work overtime. Those support staff located in the processing facilities may work evening shifts.

Work environment. Branch office jobs, particularly teller positions, require continual communication with customers, repetitive tasks, and a high level of attention to security. Tellers also work for long periods in a confined space.

Commercial and mortgage loan officers often work out of the office, visiting clients, checking loan applications, and soliciting new business. Loan officers may travel to meet clients, or work evenings if that is the only time at which a client can meet.

Financial service-sales representatives also may visit clients in the evenings and on weekends to go over the client's financial needs.

The remaining employees located primarily at the headquarters or other administrative offices usually work in comfortable surroundings and put in a standard workweek. In general, banks are relatively safe places to work.

Employment

The banking industry employed about 1.8 million wage and salary workers in 2008. About 74 percent of jobs were in commercial banks; the remainder were concentrated in savings institutions and credit unions (table 1).

Table 1. Percent distribution of employment and establishments in banking by detailed industry sector, 2008Industry segment Employment EstablishmentsTotal 100.0 100.0 Monetary authorities - central bank 1.2 0.4 Depository credit intermediation 98.8 99.6Commercial banking 73.8 71.7Credit unions 12.6 13.8Savings institutions 11.4 13.1Other depository credit intermediation 1.0 1.0SOURCE: BLS Quarterly Census of Employment and Wages, 2008.

In 2008, about 85 percent of establishments in banking employed fewer than 20 workers. However, these small establishments, mostly bank branch offices, employed 38 percent of all employees. Banks are found everywhere in the United States, but most bank employees work in heavily populated States such as New York, California, Illinois, North Carolina, Pennsylvania, and Texas.

Occupations in the Industry

Banks employ various types of financial and customer service occupations. Office and administrative support occupations make up the largest portion of jobs in the industry, while management, business, and financial occupations also employ a significant number of employees in the banking industry.

Office and administrative support occupations. These occupations account for 64 percent of jobs in the banking industry (table 2). Bank tellers, the largest occupation,

provide routine financial services to the public. They handle customers' deposits and withdrawals, change money, sell money orders and traveler's checks, and accept payment for loans. Tellers also sell bank services to customers. New accounts clerks and customer service representatives answer questions from customers, and help them open and close accounts and apply for banking services. They are knowledgeable about a broad array of bank services and must be able to sell those services to potential clients. Some customer service representatives work in a call or customer contact center environment, taking phone calls and answering emails from customers. In addition to responding to inquiries, these workers also help customers over the phone with routine banking transactions, and handle and resolve problems or complaints.

Loan and credit clerks assemble and prepare paperwork, process applications, and complete the documentation after a loan or line of credit has been approved. They also verify applications for completeness. Bill and account collectors attempt to collect payments on overdue loans. Many general office clerks and bookkeeping, accounting, and auditing clerks are employed to maintain financial records, enter data, and process the thousands of deposit slips, checks, and other documents that banks handle daily. Banks also employ many secretaries, data entry and information processing workers, receptionists, and other office and administrative support workers. Office and administrative support worker supervisors and managers oversee the activities and training of workers in the various administrative support occupations.

Management, business, and financial occupations. These occupations account for about 25 percent of employment in the banking industry. Financial managers direct bank branches and departments, resolve customers' problems, ensure that standards of service are maintained, and administer the institutions' operations and investments. Loan officers evaluate loan applications, determine an applicant's ability to repay a loan, and recommend approval of loans. They usually specialize in commercial, consumer, or mortgage lending. When loans become delinquent, loan officers, or loan counselors, may advise borrowers on the management of their finances or take action to collect outstanding amounts. Loan officers also play a major role in bringing in new business and spend much of their time developing relationships with potential customers. Trust officers manage a variety of assets that were placed in trust with the bank for other people or organizations; these assets can include pension funds, school endowments, or a company's profit-sharing plan. Sometimes, trust officers act as executors of estates upon a person's death. They also may work as accountants, lawyers, and investment managers.

Securities, commodities, and financial services sales agents, who make up the majority of sales positions in banks, sell banking and investing services. They contact potential customers to explain their services and to ascertain the customer's banking and other

financial needs. They also may discuss services, such as deposit accounts, lines of credit, sales or inventory financing, certificates of deposit, cash management, stock investments, or investment services. These sales agents also solicit businesses to participate in consumer credit card programs. At most small and medium-size banks, however, branch managers and commercial loan officers are responsible for marketing the bank's financial services. This has become a more important task in recent years.

Other occupations. Occupations used widely by banks to maintain financial records and ensure the bank's compliance with Federal and State regulations are accountants and auditors, and lawyers. In addition, computer specialists maintain and upgrade the bank's computer systems.

Table 2. Employment of wage and salary workers in banking, 2008 and projected change, 2008-2018. (Employment in thousands)

OccupationEmployment, 2008

Percent Change,2008-18

Number PercentAll Occupations 1,841.7 100.0 7.9 Management, business, and financial occupations 464.4 25.2 11.4General and operations managers 31.0 1.7 -2.3Financial managers 76.5 4.2 -2.2Financial analysts 17.7 1.0 20.0Loan counselors and officers 138.8 7.5 13.6 Professional and related occupations 75.1 4.1 11.5Computer specialists 58.1 3.2 10.0 Office and administrative support occupations 1,187.1 64.5 5.8Bookkeeping, accounting, and auditing clerks 58.7 3.2 9.1Customer service representatives 117.0 6.4 8.7Loan interviewers and clerks 79.5 4.3 9.3Secretaries and administrative assistants 43.7 2.4 6.1NOTE: Columns may not add to total due to omission of occupations with small employment. SOURCE: BLS National Employment Matrix, 2008-18.

Training and Advancement

A high school education is usually the minimum required education for most office and administrative occupations, while management, business, and financial occupations usually employ workers with at least a college degree. Good communication and customer service skills are necessary for all occupations in the banking industry. Since bank employees have access to large amounts of money and confidential financial information, most positions require a background check.

Office and administrative support occupations. Bank tellers and other clerks usually need only a high school education. Banks seek people who have good basic math and communication skills, enjoy public contact, and feel comfortable handling large amounts of money. Through a combination of formal classroom instruction and on-the-job training under the guidance of an experienced worker, tellers learn the procedures, rules, and regulations that govern their jobs. Banks are offering more products and spending more on reaching out to their customers. As a result, banks will need more creative and talented people in their tellers’ windows to compete in the consumer market place. Banks encourage upward mobility by providing access to higher education and other sources of additional training.

Some banks have their own training programs which result in teller certification. Experienced tellers qualify for certification by taking required courses and passing examinations. Experienced tellers and clerks may advance to head teller, new accounts clerk, or customer service representative. Outstanding tellers who have had some college or specialized training may be promoted to managerial positions.

Management, business, and financial occupations. Workers in management, business, and financial occupations usually have at least a college degree. A bachelor's degree in business administration or a liberal arts degree with business administration courses is suitable preparation, as is a bachelor's degree in any field followed by a master's degree in business administration (MBA). Many management positions are filled by promoting experienced, technically skilled professional personnel—for example, accountants, auditors, budget analysts, credit analysts, or financial analysts—or accounting or related department supervisors in large banks.

Various banking-related associations and privately-operated schools offer courses and programs for students interested in lending, as well as for experienced loan officers who want to keep their skills current. Completion of these courses and programs generally enhances the individual's employment and advancement opportunities. The Banking Administration Institute offers the Loan Review Certificate program for persons who review and approve loans. The Mortgage Bankers Association (MBA) offers the

Certified Mortgage Banker (CMB) program. A candidate who earns the CMB exhibits a deep understanding of the mortgage business. To obtain the CMB, one must have at least 3 years of experience, earn educational credits, and pass an exam.

Financial services sales agents usually need a college degree; a major or courses in finance, accounting, economics, marketing, or related fields serve as excellent preparation. Experience in sales also is very helpful. These workers learn on the job under the supervision of bank officers. Sales agents selling securities need to be licensed by the National Association of Securities Dealers, and agents selling insurance also must obtain an appropriate license.

Additional training may improve workers’ chances of advancing to higher level executive, administrative, managerial, and professional positions. Banks often provide opportunities and encourage employees to take classes offered by banking and financial management affiliated organizations, or other educational institutions. Classes often deal with one of the different aspects of finance and banking, such as accounting management, budget management, corporate cash management, financial analysis, international banking, and data processing systems procedures and management. Employers also sponsor seminars and conferences, and provide textbooks and other educational materials. Many employers pay for educational courses.

Since the banking industry depends on technology, an understanding of banking computer systems and software can greatly improve one's skills and advancement opportunities.

Outlook

Employment growth will be driven by increases in Americans’ wealth and investments and a growing number of local branches.

Employment change. Wage and salary employment in banking is projected to grow 8 percent between 2008 and 2018, compared with the 11 percent growth projected for wage and salary employment across all industries.

Banks compete strongly to attract new customers. Because convenience of local branches is one of the most important factors for customers selecting a bank, the number of local branches will continue to increase. New branches frequently will be

located in nontraditional locations, such as inside grocery stores. A growing number of branches will increase employment of branch managers and tellers.

Deregulation of the industry allows banks to offer a variety of financial and insurance products that they were once prohibited from selling. Managing and selling these services will spur demand for financial analysts and personal financial advisors. Demand for "personal bankers" to advise and manage the assets of wealthy clients, as well as the aging baby-boom generation, also will grow. However, banks will continue to face considerable competition in financial services from nonbank establishments, such as insurance companies and independent financial advisor firms.

The increasing number of retired baby boomers should have a beneficial effect on total employment in the banking industry. They are more likely than younger age groups to hold bank deposits and visit branches to do their banking. Many also need help in retirement planning and investing which increases demand for financial managers and personal financial advisors.

Job prospects. Job opportunities should be favorable for office and administrative support workers because they make up a large proportion of bank employees and many individuals leave these positions for other jobs that offer higher pay or greater responsibilities. The need for skilled workers will create good job opportunities for individuals with financial services backgrounds.

Earnings

Industry earnings. Earnings of nonsupervisory bank employees involved in depository credit intermediation averaged $605 a week in 2008, compared with $798 for workers in finance and insurance industries, and $608 for workers throughout the private sector. Relatively low pay in the banking industry reflects the high proportion of low-paying administrative support jobs.

Greater responsibilities generally result in a higher salary. Experience, length of service, and, especially, the location and size of the bank also are important. Wages in the

banking industry also vary significantly by occupation. Wages in the largest occupations in banking appear in table 3.

Table 3. Median hourly wages of the largest occupations in depository credit intermediation, May 2008

OccupationDepository credit intermediation

All industries

General and operations managers $42.98 $44.02Financial managers 37.15 47.76Loan officers 25.72 26.30Executive secretaries and administrative assistants

19.72 19.24

Loan interviewers and clerks 15.23 15.61Customer service representatives 14.56 14.36New accounts clerks 14.47 14.53Bookkeeping, accounting, and auditing clerks 14.43 15.63Office clerks, general 12.76 12.17Tellers 11.35 11.35SOURCE: BLS Occupational Employment Statistics, May 2008.

Benefits and union membership. In addition to common benefits offered by many industries, equity sharing and performance-based pay increasingly are part of compensation packages for some bank employees. As banks encourage employees to become more sales-oriented, incentives are increasingly tied to meeting sales goals, and some workers may even receive commissions for sales or referrals. As in other industries, part-time workers do not enjoy the same benefits that full-time workers do.

Very few workers in the banking industry are unionized—only 1 percent are union members or are covered by union contracts, compared with 14 percent of workers across all industries.

Number and Types of Banks

 

The number of banks in all now stands at 49 in Bangladesh. Out of the 49 banks, four are Nationalised Commercial Banks (NCBs), 28 local private commercial banks, 12 foreign banks and the rest five are Development Financial Institutions (DFIs).

 

Sonali Bank is the largest among the NCBs while Pubali is leading in the private ones. Among the 12 foreign banks, Standard Chartered has become the largest in the

country. Besides the scheduled banks, Samabai (Cooperative) Bank, Ansar-VDP Bank, Karmasansthan (Employment) Bank and Grameen bank are functioning in the financial sector.The number of total branches of all scheduled banks is 6,038 as of June 2000. Of the branches, 39.95 per cent (2,412) are located in the urban areas and 60.05 per cent (3,626) in the rural areas. Of the branches NCBs hold 3,616, private commercial banks 1,214, foreign banks 31 and specialised banks 1,177.

 

Bangladesh Bank (BB) regulates and supervises the activities of all banks. The BB is now carrying out a reform programme to ensure quality services by the banks.   

Bangladesh Bank

 

Bangladesh Bank (BB) has been working as the central bank since the country's independence. Its prime jobs include issuing of currency, maintaining foreign exchange reserve and providing transaction facilities of all public monetary matters. BB is also responsible for planning the government's monetary policy and implementing it thereby.

 

The BB has a governing body comprising of nine members with the Governor as its chief. Apart from the head office in Dhaka, it has nine more branches, of which two in Dhaka and one each in Chittagong, Rajshahi, Khulna, Bogra, Sylhet, Rangpur and Barisal.

 

Banks of Bangladesh at a glance

 NCBs Name Number of

branchesDeposits(As of June, 2000)

Special Services

1. Sonali Bank Ltd.

1299 Taka 168,187 million Industrial, Agri loan, Poverty alleviation,

etc.2. Janata Bank Ltd.

898 Taka 96,000 million Industrial & agri loan, Poverty alleviation, etc.

3. Agrani Bank  Ltd.

903 Taka 100,000 million Industrial & agri loan, poverty alleviation, etc.

4. Rupali Bank Ltd.

513 Taka 42,485 million Industrial & Agri loan, etc.

Private Banks

1. Pubali Bank350 Taka 27,000 million Industrial & agri loan,

etc.2. Uttara Bank 198 Taka 21,979 million Industrial & agri loan,

etc.3. National     Bank Ltd.

66 Taka 20,850 million Industrial & agri loan, etc.

4. The City     Bank Ltd.

76 Taka 13,750 million Industrial & agri loan, etc.

5. United     Commercial     Bank Ltd.

79 Taka 10,000 Million Industrial & agri loan, etc.

6.  Arab     Bangladesh Bank Ltd.

61(60+1) Taka 13,206 million Industrial & agri loan, etc.

7.  IFIC Bank       Ltd.

60(58+2) Taka 17,032 million Industrial & agri loan, etc.

8.  Islami bank       Bangladesh Ltd.

110 Taka 27,750 million Industrial & agri loan, etc.

9.   Al Baraka        Bank   Bangladesh  Ltd.

34 Taka 9,000 million Industrial & agri loan, etc.

10. Eastern Bank  Ltd.

21 Taka 12,600 million Industrial & agri loan, etc.

11. National  Credit &  Commerce        Bank Ltd.

30 Taka 9,700 million Industrial & agri loan, etc.

12. Prime Bank      Ltd.

23 Taka 8,550 million Industrial & agri loan, etc.

13. Southeast      Bank Ltd.

12 Taka 7,140 million Industrial & agri loan, etc.

14. Dhaka        Bank Ltd.

12 Taka 7,290 million Industrial & agri loan, etc.

15. Al-Arafah Islami Bank Ltd.

35 TK.7400Million

Industrial & agri loan, etc.

16. Social       Investment        Bank Ltd.

65 Taka 5,250 million Industrial & agri loan, etc.

17. Dutch-      Bangla Bank Ltd.

8 Taka 4,715 million Industrial & agri loan, etc.

18. Mercantile      Bank Ltd.

12 Taka 4,300million Industrial & agri loan, etc.

19. Standard       Bank Ltd.

8 Taka 1,739million Industrial & agri loan, etc.

20. One Bank     Ltd.

4 Taka 2,200million Industrial & agri loan, etc.

21. EXIM Bank      5 Taka 2,600 million Industrial loan, etc.22.Bangladesh      Commerce       Bank Ltd.

24 Taka 400 million Industrial & agri loan, etc.

23. Mutual  Trust Bank Ltd.

3 Taka 700 million Industrial & agri loan, etc.

24.First Security       Bank Ltd.

4 Taka 1,200million Industrial & agri loan, etc.

25. The Premier      Bank Ltd.

6 Taka 1,500million Industrial & agri loan, etc.

26. Bank Asia      Ltd.

4 Taka 625 million Industrial loan, etc.

27. The Trust  Bank Ltd.

10 Taka 980 million Industrial loan, etc.

28. Shah Jalal Bank Limited (Based on Islamic Shariah)

     

Foreign Banks 

1.  American     Express  Bank     

3 Taka 7,080million Industrial loan, etc.

2. Standard    Chartered      Grindlays  Bank

6 Taka 11,329 million Industrial loan, etc.

3.  Habib Bank      Ltd.

2 Taka 1,041million Industrial loan, etc.

4. State Bank  Of India

1 Taka 805 million Industrial loan, etc.

5. Credit  Agricole  Indosuez    (The Bank)

2 Taka 6,750 million Industrial loan, etc.

6. National  Bank of   Pakistan  

1 Taka 165 million Industrial loan, etc.

7. Muslim    Commercial Bank Ltd.

2 Taka 870 million Industrial loan, etc.

8. City Bank   NA 1 Taka 2,447 million Industrial loan, etc.9. Hanvit  Bank Ltd.

1 Taka 368 million Industrial loan, etc.

10. HSBC Ltd. 2 Taka 2,400 million Industrial loan, etc.11. Shamil Bank of Bahrain E.C. (Islami Banker)

1 Taka 1,000million Industrial loan, etc.

12. Standard Chartered  Bank

5 branches and 1 booth

Taka 10,961 million (as of May, 2000)

TT free of charges, ATM, Money Link, Tele Banking, Electronic Banking

Development Banks

1. Bangladesh    Krishi Bank

850 Taka 29,890 million Industrial & agri loan, etc.

2.RajshahiKrishiUnnayan   301 Taka 4,800 million Industrial & agri

Bank loan, etc.3. Bangladesh    Shilpa Bank

15 Taka 646 million Industrial & agri loan, etc.

4. Bangladesh    Shilpa Rin    Sangstha 

5 Taka 150 million Industrial & agri loan, etc.

5.Bank of  Small Industries &    Commerce   Bangladesh Ltd.

25 Taka 6,466 million Small Industrial & agri loan, etc.

Other

1. Ansar VDP   Unnayan  Bank 

100 Taka 18 million Small Industrial & agri loan, etc.

2. Bangladesh    Samabai   Bank Ltd.   (BSBL) 

*** Taka 22 million Small Industrial & agri loan, etc.

3. Grameen   Bank 

1148 Taka 5,655 million Small Industrial & agri loan, etc.

4.Karmasansthan    Bank 

32 Taka 18 million Small Industrial & agri loan, etc

 

Services of the Banks

 

Accounts, Current, FDR, PDS, Deposit scheme

Current Account: Generally this sort of account opens for business purpose. Customers can withdraw money once or more against their deposit. No interest can be paid to the customers in this account. If the amount of deposit is below taka 1,000 on an average the bank has authority to cut taka 50 from each account as incidental charge after every six months. Against this account loan facility can be ensured. Usually one can open this account with taka 500. One can open this sort of account through cash or check/bill. All the banks follow almost the same rules for opening current account.

 

Savings Bank Account 

Usually customers open this sort of account at a low interest for only security. This is also an initiative to create people's savings tendency. Generally, this account is to be opened at taka 100. Interest is to be paid in June and December after every six months. If money is withdrawn twice a week or more than taka 10,000 is withdrawn (if 25% more compared to total deposit) then interest is not paid. This account guarantees loan. Almost all the banks follow the same rules in the field of savings account, except foreign banks for varying deposit. On an average, all the banks give around six percent interest.

 

Special Services

Some Banks render special services to the customers attracting other banks.

 

Internet Banking

 

Customers need an Internet access service. As an Internet Banking customer, he will be given a specific user ID and a confident password. The customer can then view his account balances online. It is the industry-standard method used to protect communications over the Internet.

 

To ensure that customers' personal data cannot be accessed by anyone but them, all reporting information has been secured using Version and Secure Sockets Layer (SSL).

 

Home Banking

 

Home banking frees customers of visiting branches and most transactions will be automated to enable them to check their account activities transfer fund and to open L/C sitting in their own desk with the help of a PC and a telephone.

 

Electronic Banking Services for Windows (EBSW)

 

Electronic Banking Service for Windows (EBSW) provides a full range of reporting capabilities, and a comprehensive range of transaction initiation options.

 

The customers will be able to process all payments as well as initiate L/Cs and amendments, through EBSW. They will be able to view the balances of all accounts,

whether with Standard Chartered or with any other banks using SWIFT. Additionally, transactions may be approved by remote authorization even if the approver is out of station.

 

Automated Teller Machine (ATM)

 

Automated Teller Machine (ATM), a new concept in modern banking, has already been introduced to facilitate subscribers 24 hour cash access through a plastic card. The network of ATM installations will be adequately extended to enable customers to non-branch banking beyond banking.

 

Tele Banking

 

Tele Banking allows customers to get access into their respective banking information 24 hours a day. Subscribers can update themselves by making a phone call. They can transfer any amount of deposit to other accounts irrespective of location either from home or office.

 

SWIFT

 

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.

   

MONETARY & CREDIT POLICY: 

The monetary and credit policy for the financial year that ended  in June,2000 was formulated with the objective of full utilization of domestic  resources and rapid economic growth through priorities for agriculture, industry, export, and expansion and strengthening of the private sector, at the same time keeping inflation within tolerable limits. A modern expansionary monetary and credit policy was adopted in order to make good the losses to agriculture, industry, and infrastructure by the devastating floods of 1998. After the flood the economy remained sluggish in the first quarter of 1999-2000 and the private sector demand for credit shrank. In view of this, the Annual Development Programme (ADP) was expanded and development activities in the private sector were geared up. As a result, the public sector absorbed credit at an accelerated rate. Though credit to the private sector picked up towards the end of the year, the overall annual growth was smaller than programmed, although gross domestic credit expanded a little faster than projected. Money supply increased by 15.3% in 1999-2000 compared to the expansion of 8.6% in the preceding year.

 

 NARROW MONEY:

Narrow Money increased by Tk. 2,631.90 crores or 15.3% to Tk.19,881.30 crores in 1999-2000. Of the components of Narrow Money, currency outside banks went up by Tk.1,489.40 crores or 17.2% to Tk.10,176.00 crores, and demand deposits went up by Tk.1,142.50 crores or 13.3% to Tk.9,705.30 crores. 

 

 BROAD MONEY: 

Broad Money increased by Tk.11,735.70 crores or 18.6% to Tk. 74,762.40 crores in 1999-2000 compared to the increase of  12.8% in the preceding year. Of the components of Broad Money, Narrow Money increased by 15.3% and time deposits rose by 19.9% compared to the increase of 8.6% in Narrow Money and 14.5% in time deposits in the preceding year. The shares of currency outside banks, demand deposits and time deposits in Broad Money stood at 13.6%, 13.0%, and 73.4% respectively on 30th June,2000 compared to 13.8%, 13.6% and 72.6% respectively on 30th June,1999.Expansion of credit to the private sector, government sector (net), public sector, and other assets (net), along with a  surplus in net foreign assets contributed to the expansion of Broad Money.

 

 RESERVE MONEY: 

Reserve Money increased by Tk.2,321.80 crores or 15.7% to Tk.17,064.50 crores in 1999-2000 compared to the increase of 8.3% during the preceding year. Of the

components of Reserve Money, currency outside banks increased by Tk.1,489.40 crores or 17.1% compared to the increase of Tk.533.30 crores or 6.5% during the preceding  year. Scheduled banks balances with the Bangladesh Bank increased by Tk.770.90 crores or 15.3% in 1999-2000 compared to the increase of Tk.488.20 crores or 10.8% in the preceding year. Their cash in tills increased by Tk.61.50 crores or 6.0% as against the increase of Tk.103.60 crores or 11.2% in the preceding year. The increase in Bangladesh Bank's credit to the  government (net) by Tk.1,738.10 crores and net surplus in the foreign sector by Tk.1,262.40 crores played the main role in exerting expansionary influence on the Reserve Money. However the decline of Tk.333.60 crores and Tk.44.90 crores in the borrowings by the scheduled banks and other financial institutions respectively along with the fall of Tk.300.20 crores in other assets (net) partly offset the expansionary impact of those sectors.

 

 

DOMESTIC CREDIT:

Total domestic credit increased by Tk.8,581.20 crores or 13.6% to Tk. 71,489.00 crores ( including adjustment of bonds issued by the government) in 1999-2000 as compared to the increase of Tk.7,267.60 crores or 13.1% in the preceding year. Expansion of credit to the government, private, and public sectors to the extent of Tk.3,524.30 crores (31.3%), Tk.4,906.10 crores (10.7%), and Tk.150.80 crores (2.5%) respectively contributed to the expansion in total domestic credit in 1999-2000. Credit to the government and private sector had increased by 21.3% and 13.8% respectively, while credit to the public sector declined by 3.7% in the preceding year.

 

 

BANK CREDIT: 

The outstanding level of bank credit (excluding foreign bills and inter-bank items) increased by Tk.5,123.30 crores or 10.3% to Tk.54,646.10 crores in 1999-2000 as compared to the increase of 12.4% in the  preceding year. Of the components of bank credit, advances increased by Tk.4,892.70 crores or 10.3% and the bills purchased and discounted went up by Tk.230.60 crores or 11.3%. 

 

 

BANK DEPOSITS: 

Bank deposits ( excluding inter-bank items) increased by Tk.11,044.70 crores or 18.6% to Tk.70,278.70 crores in 1999-2000 compared to the increase of 14.2% in the preceding year. Of this increase , time deposits went up by Tk.9,103.80 crores or 19.9% to Tk.54,881.10 crores, government deposits by Tk.723.60 crores or 14.8% to

Tk.5,615.20 crores and demand deposits by Tk. 1,142.50 crores or 13.3% to Tk.9,705.30 crores. On the other hand, restricted deposits increased by Tk.74.80 crores in 1999-2000.

 

 

CASH RESERVE REQUIREMENTS (CRR): 

Statutory CRR with Bangladesh Bank was lowered for the scheduled banks to 4.0% of their liabilities (demand plus time deposits ) (excluding inter-bank deposits) from 5% with effect from 1st October,1999.

  

BANK RATE:

The Bank Rate was lowered from 8.0% to 7.0% on 29th August,1999 and remained unchanged through 30th June,2000.           

Bank-wise interest rate on deposit and advances (loans)

Interest Rates On

Private Banks 

  Dhaka Bank Limited

South East Bank

BCBL Prime Bank Limited

Dutch Bangla

Al-Arafah

Mercantile

One Bank

EXIM

Rates Effective From

01.08.97

01.04.97

16.09.00

01.11.99

01.01.2000

01.01.98

02.06.99

14.07.99

03.07.99

DEPOSIT RATES

Savings Rates

Rural - - - - - - - - -Urban 8.50 8.00 7.75 8.00 8.00 7.98 8.00 8.00-

8.508.50

Fixed Deposit Rates

                 

Three months and above but less than six months

9.25 8.25-9.00

8.75 9.00 9.00-9.50

9.35 8.50 9.00-9.75

9.00-9.50

Six months and but less than one year

9.50 8.50-9.50

9.00 9.25 9.25-9.75

9.77 9.00 9.25-10.00

9.50-10.00

One year and above but less than two years

9.75 9.00-10.00

9.25 9.50 9.50-10.00

10.20 9.50 9.50-10.25

10.00-10.50

Two years and above but less than three years

9.75 9.50-10.50

9.50 10.00 9.75-10.25

10.40 10.00 9.75-10.50

10.50-11.50

Three years and above

9.75 10.50-11.00

10-12 10.50 10.00-10.50

10.62 10.50 - -

Lending Rates

                 

Agricultur 10.00 10.00 - 12.00 11.50- - 15.00 - 12.00

e -14.00

15.00

Large and Medium Scale

                 

Lending(Term Loan)

12.00-15.00

13.00-15.50

13.50 16.00 16.00 - 15.00 15-16 16.00

Working Capital

11-15 14.00-15.50

14.50 16.00 15.50 - 16.00 12-16 16.00

Exports 9-10 10.00 - 10.00 10.00 - 10.00 8-10 10.00

Other Commercial Lendings

11-16 13.00-15.50

15.00 16.50 16.00 - 16.00 16.00 16.00

Small Industry

11.00 12.00 - 15.00 16.00 - 15.00 16.00 16.00

Others 13-16 13.00-16.00

14-15 16.00-16.5

14-16 - 15-18 14-16 16.00

Interest OnForeign BanksSociete Generale

Hanvit Bank

H.S.B.C Faysal Bank

Rates Effective From

01.10.99 01.02.97 14.08.00 01.07.99

Deposit Rates        Savings Rates        Rural - - - -Urban 6.75-7.25 6.50 5.25-6.25 7.50Fixed Deposit Rates

       

Three months and above but less than six months

7.25-8.25 7.50 6.25-7.25 8.5-10.00

Six months and but less than one year

7.50-8.75 8.00 6.75-7.50 9-10.50

One year and above but less than two years

- 8.50 7.25-8.00 9.5-11.5

Two years and above but less than three years

- 9.00 - 10-12

Three years and above

- 9.00 - 10.5-12.5

Lending Rates        Agriculture 10-12 10-12 12.50-14.00 10-14Large and Medium Scale

       

Lending(Term Loan)

10.50-15 10.50-12.50

13-18 13-18

Working Capital 9.75-14.50 10-12 12-18 12-17Exports 8-10 10.00 9-10 10.00Other Commercial Lendings

16-18 14.00 12-18 12-18

Small Industry 12.25-14.25 11.00 10-12 10-12Others 14.25-16.25 12-14 9-18 10-16

Challenges within the banking industry

, the banking industry is a highly regulated industry with detailed and focused regulators. All banks with FDIC-insured deposits have the FDIC as a regulator; however, for examinations,[clarification needed] the Federal Reserve is the primary federal regulator for Fed-member state banks; the Office of the Comptroller of the Currency (“OCC”) is the primary federal regulator for national banks; and the Office of Thrift Supervision, or OTS, is the primary federal regulator for thrifts. State non-member banks are examined by the state agencies as well as the FDIC. National banks have one primary regulator—the OCC. Qualified Intermediaries & Exchange Accommodators are regulated by MAIC.

Each regulatory agency has their own set of rules and regulations to which banks and thrifts must adhere.

The Federal Financial Institutions Examination Council (FFIEC) was established in 1979 as a formal interagency body empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions. Although the FFIEC has resulted in a greater degree of regulatory consistency between the agencies, the rules and regulations are constantly changing.

In addition to changing regulations, changes in the industry have led to consolidations within the Federal Reserve, FDIC, OTS, MAIC and OCC. Offices have been closed, supervisory regions have been merged, staff levels have been reduced and budgets have been cut. The remaining regulators face an increased burden with increased workload and more banks per regulator. While banks struggle to keep up with the changes in the regulatory environment, regulators struggle to manage their workload and effectively regulate their banks. The impact of these changes is that banks are receiving less hands-on assessment by the regulators, less time spent with each institution, and the potential for more problems slipping through the cracks, potentially resulting in an overall increase in bank failures across the United States.

The changing economic environment has a significant impact on banks and thrifts as they struggle to effectively manage their interest rate spread in the face of low rates on loans, rate competition for deposits and the general market changes, industry trends and economic fluctuations. It has been a challenge for banks to effectively set their growth strategies with the recent economic market. A rising interest rate environment

may seem to help financial institutions, but the effect of the changes on consumers and businesses is not predictable and the challenge remains for banks to grow and effectively manage the spread to generate a return to their shareholders.

The management of the banks’ asset portfolios also remains a challenge in today’s economic environment. Loans are a bank’s primary asset category and when loan quality becomes suspect, the foundation of a bank is shaken to the core. While always an issue for banks, declining asset quality has become a big problem for financial institutions. There are several reasons for this, one of which is the lax attitude some banks have adopted because of the years of “good times.” The potential for this is exacerbated by the reduction in the regulatory oversight of banks and in some cases depth of management. Problems are more likely to go undetected, resulting in a significant impact on the bank when they are recognized. In addition, banks, like any business, struggle to cut costs and have consequently eliminated certain expenses, such as adequate employee training programs.

Banks also face a host of other challenges such as aging ownership groups. Across the country, many banks’ management teams and board of directors are aging. Banks also face ongoing pressure by shareholders, both public and private, to achieve earnings and growth projections. Regulators place added pressure on banks to manage the various categories of risk. Banking is also an extremely competitive industry. Competing in the financial services industry has become tougher with the entrance of such players as insurance agencies, credit unions, check cashing services, credit card companies, etc.

As a reaction, banks have developed their activities in financial instruments, through financial market operations such as brokerage and MAIC trust & Securities Clearing services trading and become big players in such activities.

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