banking and insurance and business mangement study
Executive Summary :Business world is becoming very much complex day by day. Without very much practical experience business becomes difficult and in some cases impossible. The whole world is moving because of business relation. Business plays a very important role is regarded as a media through whom we have an acquaintance with the real world. The project report titled on ―Performance appraisal and its Process of employees of Social Investment Bank Ltd.” is submitted as a partial prerequisite of the BBA Program of University of Liberal Arts Bangladesh. The purpose of this project report is to learn how to apprise the employees in banking sector. The topic was assigned by my supervisor Hasan Shirazi Assistant Professor ULAB School of Business. Performance appraisal plays an important role to develop employee‘s performance day by day in progress of bank sectors. To complete this study I have selected Social Investment Bank Ltd which started its operation on the 22 November, 1995 as a second generation Islamic Bank in close co operation and assistance of some renowned personalities of the Islamic world. Then I used structured Questionnaire & the AVP of HRD has been interviewed through it. The SIBL through its HRD Department, Performance appraisal has different objectives for management and for the employees. Employees are interested in having an assessment of their work from the viewpoint of personal development, work satisfaction and involvement in the organization. Management assesses the performance of employees to maintain organizational control and disburse rewards and punishments to further organizational goals. Thus, a spirit of mutuality is essential in an effective performance appraisal system. For employees, it can impart a better understanding of their job, skills and limitations, and provides an opportunity for self-reflection. It can help identify development needs. It can increase mutuality and strengthen communication between employees and management. This report deals with the detail description performance appraisal and performance appraisal program of HRD in SIBL. While preparing this report it has been tried to reveal the insights of the HRD program of the bank & a few recommendations and suggestions were also prescribed based on the observations and findings. At the same time for easier understanding of the report, supporting topics and terms are explained in light of textbooks and regulatory guidelines. As a part of my project program I got a chance to work at this area for a period of two months. During this period I have learned about this bank and its work environment, which inspire me to work on my topic.
Introduction and Background: The Bachelor of Business Administration (BBA) was introduced by University of Liberal ArtsBangladesh with an objective to supply an adequate number of highly trained and educated graduates to the economy. As the BBA program is the integrated, theoretical and practical method of teaching major disciplines in the preceding years of their courses. To undergo project program each participant has to prepare a report on the particular topic related with the organization. Based on my practical experience as well as theoretical knowledge, I have accomplished the project report regarding Performance Appraisal of Employees of Social Investment Bank Ltd. Performance Appraisal process must be done in any organization in an effective manner under proper management, so HR division must be involved here directly because HRD deals with the viewpoint of personal development, work satisfaction of workers and involvement in the organization. 1.1 Rational: Performance appraisal is one of the key functions of human resource management. To achieve the target goals of the organization, human resources manager has to be very cautious about the performance of the manpower of the organization. In SIBL, performance is appraised on daily basis in the field level and other cases on specific periodic basis. It helps supervisors gain a better understanding of each employee‘s abilities with the goal to help train and develo p skills and strengths. It provides a chance to evaluate job progress, stimulate interest and improve job performance by recognizing productive work and by pointing out areas of growth and development. It provides a feedback mechanism that might otherwise be overlooked. So, performance appraisal is a continuous process. 1.2 Scope of the study: As a student of Human Resource Management, as a potential human resource manager, it is very much necessary for me to know about the performance appraisal system in a bank. I have been assigned in Social Investment Bank Ltd. in Mirpur Branch and thus paved me the way to get myself familiarized with the official environment in Bank for the first time. The area of concentration of this report is confined in investigating different aspect of performance appraisals as well as problems and prospects and by the way endeavor is made to give recommendation for handling the problem. 1.4 Objectives: 1.4.1 Broad objective: The Broad objective of the report is to learn about the performance appraisal process of Social Investment Bank Bangladesh Ltd. 1.4.2 Specific Objectives:
This term paper has been prepared for fulfilling the following specific objectives: To enlarge the dimension of knowledge regarding performance appraisal.
To identify the difference between theory (what we have learned from the text) and practice (what is really happened). To mention the problems that the employees & the managers face with the process. To identify the strengths and weakness of the performance process.
2.0 Methodology In order to make the report more meaningful and presentable two sources of data and information have been used widely. 2.1 Sources of data: There are 2 kinds of Data. 2.1.1 Primary Data: Observe the environment behavior, facts. Action, record and present condition of the program.
Case study. Have conversation with my supervisor and regular employees of the bank. Make questionnaire to get relevant information. Direct experiment and group discussion there. Personal interview through face-to-face and telephone.
2.1.2 Secondary data: Since advantage in computers and technology, I got data through browsing websites, features books, different HR books and compliments of senior ranked officials of SIBL in different magazines, portfolios, History. 2.2 Methods of collecting data: For collecting data I used following methods:
Such as: Sex: male  Female  Do you prefer to give add for job mostly on line? [Yes] [No] Interviews face to face.
Direct experiment Focus group interviews. Observing critical incidents Mail, web search, and through Telephone
2.3 Limitations: I have faced some limitations during preparing report due to the confidentiality of documents and resources of SIBL as mentioned below:
Time constraints on part of the practicing experts who was otherwise very willing to help. Non-availability of data in a systematic way. I was not able to visit all branches of SIBL. Lack of elaborate discussion with the high ranked officials due to their busyness.
2.4 Factors and variables covered: There are some factors and variables, which need to be covered in performance appraisal process. These are: 1. Time, table and schedule. 2. Investment and return. 3. Educational qualification. 4. Extra curriculum 5. Language proficiency. 6. Technical capability. 7. Employees confidence level. 8. Experience. 2.5 Tools and Analysis: To prepare this report I took the help of following tools and analytical process
Rating scale for appraising employees. MS Word, Excel for data processing Different manual & Journals Web site. Interview.
3.0 Performance Appraisal 3.1 Basic Concept: In HRM, performance appraisal is use to evaluate employees current and past performance relative to his performance standard. Its effect may result in increased pay, a promotion or assistance in personal development areas through training. Evaluating the performance may take the form of a five-minute discussion between employees and their supervisor, or a more elaborate, several week processes involving many specific steps. Performance appraisal also assumes that the employee understood his performance standard and the required areas of improvement. His supervisor provides the employee with the feedback, development and incentives required to help the person eliminate performance deficiencies .The aim should be to improve performance. 3.2 Why Performance Appraisals HR departments use the informal gathered through performance appraisals to evaluate the success of recruitment, selection, orientation, placement, training, and other activities. Although informal and ongoing appraisals on a day-to-day basis are necessary to a smooth operation, these methods are insufficient for the HR department‘s needs. Formal appraisals are needed to
help managers with placement, pay, and other HR decisions. In a study of 324 organizations in southern California, for example, 94 percent had a formal appraisal system. This survey research revealed that the major uses of appraisals were for compensation (74.9 percent), performance improvement (48.4 percent), feedback (40.4 percent), placement-related decisions (40.1 percent), and documentation (30.2 percent).In appendix part Figure-1describes these and other uses. 3.3 Uses of Performance Appraisals
Performance improvement: Performance feedback allows the employee, the manager, and personnel specialists to intervene with appropriate actions to improve performance. o Compensation adjustments: Performance evaluations help decision makers determine who should receive pay raises. Many firms grant part or all of their pay increases and o o o o o bonuses on the basis of merit, which is determined mostly through performance appraisals. Placement decisions: Promotions, transfers, and demotions are usually based on past or anticipated performance. Often promotions are a reward for past performance. Development needs Training and: Poor performance may indicate a need for retraining. Likewise, good performance may indicate untapped potential that should be developed. Career planning and development: Performance feedback guides career decisions about specific career paths one should investigate. Staffing process deficiencies: Good or bad performance implies strengths or weaknesses in the personnel department‘s staffing procedures. Informational inaccuracies: Poor performance may indicate errors in job analysis information, human resource plans, or other parts of the personnel management information system. Reliance on inaccurate information may have led to inappropriate hiring, training, or o o o counseling decisions. Job-design errors: Poor performance may be a symptom of ill-conceived job designs. Appraisals help diagnose these errors. Equal employment opportunity: Accurate performance appraisals that actually measure job-related performance ensure that internal placement decisions are not discriminatory. External challenges: Sometimes performance is influenced by factors outside the work environment, such as family, financial, health, or other personal matters. If these factors are uncovered through appraisals, the human resource department may be able to provide o assistance. Feedback to human resources: Good or bad performance throughout the organization indicates how well the human resource function is performing.
3.4 Methods of Performance appraisal: In this section we will look at specific ways in which HRM can actually establish performance standards and devise, instruments that can be used to measure and appraise an employee‘s performance. Three different approaches exist for doing appraisals. Employees can be appraised against (1) absolute standards, (2) relative standards, or (3) objectives. No one approach is always best; each has its strengths and weaknesses. 3.4.1 Absolute Standards Our first group of appraisal methods uses absolute standards. This means that employees‘ are compared to a standard; and their evaluation is independent of any other employee in a work group. Included in this group are the following methods-, the essay appraisal, the critical incident appraisal, the checklist, the adjective rating scale, forced choice and behaviorally anchored rating scales. Let‘s look at each of these, focusing on their strengths and weaknesses 1. Essay Appraisal: The Essay Appraisal probably the simplest method of appraisal is to have the appraiser write a narrative describing an employee‘s strengths, weaknesses, past performance, potential, and suggestions for improvement. The strength of the essay appraisal lies in its simplicity. It requires no complex forms or extensive training to complete. The essay appraisal is also valuable in providing specific information, much of which can be easily by the employee. However, inherent in this method are several weaknesses. Because the essays are unstructured, they are likely to vary widely in terms of length and content. This method also provides only qualitative data. HRM decisions generally improve when useful quantitative data is obtained because it enables employees to be compared and ranked more objectively. 2. Critical Incident Appraisal: The Critical incident appraisal focuses the rater‘s attention on those critical or key behaviors that make the difference between doing a job effectively and doing it ineffectively. The appraiser writes down anecdotes describing what the employee did that was especially effective or ineffective. For example, a police sergeant might write the following critical incident about one of her officers: ―Brought order to a volatile situation by calmly discussing options with an armed suspect during a hostage situation which resulted in all hostages being released, and the suspect being apprehended without injury to any individual. Note that with this approach to appraisal, specific behaviors are cited, not vaguely defined individual traits. A behavior-based appraisal such as this should be more valid than trait-based appraisals because it is clearly more job related. It is one thing to say that an employee is ―aggressive,‖ ―imaginative,‖ or ―relaxed,‖ but that does not tell us anything about how well the
job is being done. Critical incidents, with their focus on behaviors, judge performance rather than personalities. The strength of the critical incident method is that it looks at behaviors. Its drawbacks are basically that- appraisers are required to regularly write these incidents down, and doing this on a daily or weekly basis for all employees is time-consuming and burdensome for supervisors. 3. Checklist appraisal: In the checklist appraisal, the evaluator uses a list of behavioral descriptions and checks off those behaviors that apply to the employee. Once the checklist is complete, it is usually evaluated by the HRM staff, not the appraiser completing the checklist. Therefore the rater does not actually evaluate the employee‘s performance; he or she merely records it. An analyst in HRM then scores the checklist, often weighing the factors in relationship to their importance to that specific job. The final evaluation can then be returned to the appraiser for discussion with the employee, or someone from HRM can provide the feedback to the employee. The checklist appraisal reduces some bias in the evaluation process since the rater and the scorer are different: However, the rater usually can pick up the positive and negative connections in each item—so bias can still be introduced. From a cost standpoint, too, this appraisal method may be inefficient if there are a number of job categories for which an individualized checklist of items must be prepared. 4. The Behaviorally Anchored Rating Scales: The Behaviorally Anchored Rating Scales (BARS) combine major elements from the critical incident and adjective rating scale approaches. The appraiser rates the employees based on items along a continuum, but the points are examples of actual behavior on the given job rather than general descriptions or traits. Behaviorally anchored rating scales specify definite, observable, and measurable job behavior. Possibly its major advantage stems from the dimensions generated, rather than from any particular superiority of behavior over trait anchors. The process of developing the behavioral scales is valuable for clarifying to both the employee and the rater which behaviors represent good performance and which don‘t. Unfortunately, it, too, suffers from the distortions inherent in most rating methods. 3.4.2 Relative Standards In the second general category of appraisal methods, individuals are compared against other individuals. These methods are relative standards rather than absolute measuring devices. The most popular of the relative methods are group order ranking, individual ranking, and paired comparison.
1. Group Order Ranking: Group order ranking requires the evaluator to place employees into a particular classification, such as ―top 20 percent.‖ This method, for instance, is often used in recommending students to graduate schools. Evaluators are asked to rank the student in the top 5 percent, the next 5 percent, the next 15 percent, and so forth. But when used by appraisers to evaluate employees, raters deal with all their employees in their area. So, for example, if a rater has twenty employees, only four can be in the top fifth; and, of course, four also must be relegated to the bottom fifth. The advantage of this group ordering is that it prevents raters from inflating their evaluations so everyone looks good or from forcing the evaluations so everyone is rated near the average— outcomes that are not unusual with the adjective rating scale. The main disadvantages surface, however, when the number of employees being compared is small. 2. Individual Ranking: The individual ranking method requires the evaluator merely to list the employees in order from highest to lowest. In this process, only one employee can be rated ―best.‘‖ If the evaluator is required to appraise thirty individuals, this method assumes that the difference between the first and second employee is the same as that between the twenty-first and the twenty-second. Even though some of these employees may be closely grouped, this method typically allows for no ties. In terms of advantages and disadvantages, the individual ranking method carries the same pluses and minuses as group order ranking. For example, individual ranking may be more manageable in a department of six employees than in one where a supervisor must evaluate the 19 employees that report to her. 3. Paired Comparison: The paired comparison method is calculated by taking the total of [N(N— 1)1/2 comparisons. A score is obtained for each employee by simply counting the number of pairs in which the individual is the preferred member. It ranks each individual in relationship to all others on a one-on-one basis. If ten employees are being evaluated, the first person is compared, one by one, with each of the other nine, and the number of times this person is preferred in any of the nine pairs is tabulated. Each of the remaining nine persons, in turn, is compared in the same way, and a ranking is formed by the greatest number of preferred ―victories.‖ This method ensures that each employee is compared against every other, but the method can become unwieldy when large numbers of employees are being compared. 3.4.3 Objectives The third approach to appraisal makes use of objectives. Employees are evaluated on how well they accomplished a specific set of objectives that have been determined to be critical in the successful completion of their job. This approach is frequently referred to as management by objectives (MBO). Management by objectives is a process that converts organizational
.objectives into individual objectives. It consists of four steps: (1) goal setting, (2) action planning, (3) self-control, and (4) periodic reviews. (1) Goal setting: In goal setting, the organization‘s overall objectives are used as guidelines from which departmental and individual objectives are set. At the individual level, the supervisor and employee jointly identify those goals that are critical to fulfilling the requirements of the job as determined by job analysis? These goals are agreed on and then become the standards by which the employee‘s suits will be evaluated. (2) Action planning: In action planning, the means are determined for achieving the ends established. In goal setting; that is, realistic plans are developed to attain the object. This step includes identifying the activities necessary to accomplish the objective, establishing the critical relationship between these activities, estimating the time requirements for each activity, and determining the resources required to complete each activity. (3) Self-control: Self-control refers to the systematic monitoring and measuring of performance—ideally, by having the employee review his or her own performance. Inherent in allowing employees to control their own performance is a positive image of human nature. The MBO philosophy is built on the assumption that employees can be responsible, can exercise selfdirection, and do not require external controls and threats of punishment to motivate them to work toward their objectives. (4) Periodic reviews: Finally, with periodic progress reviews, corrective action is initiated when behavior deviates from the standards established in the goal-setting phase. Again, consistent with the MBO philosophy, these supervisor-employee reviews are conducted in a constructive rather than punitive manner. Reviews are not meant to degrade the employee but to aid in future performance. These reviews should take place at least two or three times a year. What will these objectives look like? It is important that they be tangible, verifiable, and measurable. This means that, wherever possible, we should avoid qualitative objectives and substitute quantifiable statements. For example, a quantitative objective might be ―to cut, each day, 3,500 yards of cable to standard five-foot lengths, with a maximum scrap of 50 yards,‖ or ―to prepare, process, and transfer to the treasurer‘s office, all accounts payable vouchers within three working days from the receipt of the invoice.‖ Advantages: MBO‘s advantages lie in its results-oriented emphasis. It assists the planning and control functions and provides motivation, as well as being an approach to performance appraisal. That‘s because employees know exactly what is expected of them and how they will be evaluated. Moreover, employees understand that their evaluation will be based on the success -in achieving mutually agreed on objectives. Finally, it‘s expected that employees
should have a greater commitment to the objectives they have participated in developing than to those unilaterally set by their boss. Disadvantage: The major disadvantage of MBO is that it is unlikely to be effective in an environment where management has little trust in its employees. This type of environment could be one where management makes decisions autocratically and relies heavily on external controls to direct employee behavior. The amount of time needed to implement and maintain an MBO process may also cause problems. Many activities must occur to set it up, such as meetings between supervisors and employees to set and monitor objectives. These meetings can be very time-consuming. Additionally, it may be difficult to measure whether the MBO activities are being carried out properly. The difficulty involved in properly appraising the supervisor‘s efforts and performance as they carry out their MBO activities may cause it to fail. 3.5 Steps of performance appraisal: There are several steps regarding the performance appraisal process. One of the standard appraisal processes is shown below:
However, customize appraisal system is used in the job sector depending on HR policy of the company. For example, educational intuitions evaluate their employee‘s performance involving the consent of the students sometimes. In other service sectors dealing with customers or reaching the requisite target can be the dominating factor for appraising/grading employees. However, in the challenging jobs like sales and marketing or developing projects, the standard of appraisal can be different from the other employees of the organization. In the form of the report namely Annual Confidential Report (ACR) the employee comes to know about his
performance in the respective job followed by increment, promotion, bonus or permanent appointment offer in the company. At the end of the appraisal the employees can get the following feedback about his performance. Excellent Satisfactory Fair Improvement Needed Or can be graded as A+, A, B, C
Finally the assessment can be concluded followed by recommendation made by the authority. 4.0 Performance Appraisal process of the Employees of Social Investment Bank Ltd. The steps of appraisal in Social Investment Bank Limited: 4.1 Action plans of performance Appraisal: At first the HR department makes an action plan. On the basis of this plan, they perform their activities. Methods are made on the basis of some indicators and these important tasks are done by a committee in which top level management plays an important role. Now let us see the action plan of SIBL. ANNUAL APPRAISAL ‘08 ACTION PLAN of SIBL:
Steps 01 Action Meeting with a view to review Responsibilities Senior Management
Business status and fix-up
02 03 04 05 06 07 Discussion Meeting with Section in charges for better understanding about new form and distribution of the same Appraisal Completion by In-charges Appraisal Completion by the Department Heads Appraisal Completion by the Appraisal Committee Approval by the MD/ DMD Handed Over to Accounts Department for necessary implementation. SVP, EVP In-charges Department Heads SVP,EVP.AMD MD,DMD HRD
4.2 Performance appraisal categories of SIBL: Performances are appraised by SIBL in different categories. There may not be over all appraisal formats. Job descriptions and specifications are not same for everybody. The tasks of a cargo driver as well as the tasks of a manager are different. So their performance management systems will be different. In SIBL, performances are measured for the following categories:
1. Performance review for corporate level, 2. Performance review for salaried workers,
3. Performance review for rating management skills.
About these three categories are discussed in details below: 4.2.1 Performance review for corporate level: Definition of Ratings: Exceptional (5): Consistently meets and often exceeds all relevant performance standards. Provides leadership, fosters teamwork, is highly productive, innovative, and responsive and generates top quality work. Active in industry related professional and/or community groups. Exceeds Expectations (4): Exceeds expectations means consistently meets and sometimes exceeds all relevant performance standards. Show initiative and versatility, works
collaboratively, has strong technical and interpersonal Skills or has achieved significant improvement in these areas. Meets Expectations (3): Meets all relevant performance standards. Seldom exceeds or falls short of desired results. Lacks appropriate level of skills or is inexperienced/ still learning the scope of the job. Below Expectations (2): Sometimes meets the performance standards. Seldom exceeds and often falls short of desired results. Performance has declined significantly, or employee has not sustained adequate improvement, as required, since the last performance review. Needs Improvement (1): Consistently falls short of performance standards. Criteria and performance elements Quality of work:
Demonstrates competence in required job skills and knowledge. Attendance, punctuality, time management. Accuracy, clarity, consistency and thoroughness of work. Gives feedback for continuous improvement of work product. Understanding and mastery of process, methods, systems and procedures. Measures business decisions with client and shareholder satisfaction in mind Exhibits good interpersonal skills.
Work is accomplished quickly and accurately Productivity standards are met Work assignments are planned, organized and analyzed for optimum results Implements appropriate cost saving measures
Exceeds customers’ expectations Accomplished previously established goals and objectives
Productivity: Technical knowledge:
Elements Developed system or procedure manual Set up controls to ensure work flows efficiently Demonstrates proactive commitment to safety Develops project alternatives and presents recommendations Demonstrates knowledge of Federal, State and local regulations as they apply to their duties N/A 1 2 3 4 5 Average
Communication & Team work:
Elements Open to constructive critiques on how to improve Team player Pays attention to the needs of the customer Gets involved and goes beyond their assigned role Anticipates needs and does not wait to be told Effectiveness of expression in individual or group situation N/A 1 2 3 4 5 Average
Leadership & project management skills:
Elements Develops short term goals and alternatives for accomplishing tasks Assists staff in meeting their professional development goals Participates in long range plan development Assigns specific decision making responsibilities N/A 1 2 3 4 5 Average
Responds to concerns from employees or co workers Delegates work appropriately
4.2.2 Performance review for salaried workers For the salaried workers the following things are considered as the key performance indicators: Job knowledge: It includes the knowledge of products, policies and procedures; or knowledge of techniques, skills, equipment, procedures, and materials. Here rating system is varied from 1 to 9. Here grading system is:
Elements Expert in job, has thorough grasp of all phases of job Very well informed, seldom requires assistance and instruction Satisfactory job knowledge, understands and performs most phases of Rate 9 8-7 6-5-4
Job well, occasionally requires assistance or instruction
Limited knowledge of job, further training required, frequently requires 3-2
Assistance or instruction.
Lack of knowledge to perform job properly 1
Quality of work: Here the considering issues are:
Freedoms from errors and mistakes Accuracy Quality of work in general
Excessive errors and mistakes, very poor quality = 1 (rate) Highest quality possible, final job virtually perfect = 9 Quantity of work: Here the performance is measured on the basis of work output of the employee. If an employee does more than expected level, s/he gets high rate (9). If an employee does extremely low output, s/he gets lowest rate (1).
Elements High volume producer, always does more than expected or required Produces more than most, above average Handles a satisfactory volume of work, occasionally does more than is required Barely acceptable, low output, below average. Extremely low output, not acceptable Rate 9 8-7 6-5-4 3-2 1
Reliability: The extent to which the employee can be depended upon to be available for work, do it properly, and complete it on time. The degree to which the employee‘s are reliable, trustworthy, and persistent. Here
highly persistent, always gets the job done on time is rated = 9 (highest) Usually unreliable, does not accept responsibility, gives up easily is rated =1(lowest) Usually gets the job done on time, works well under pressure is rated = (4-6).
Initiative and Creativity: Here the appraiser committee searches the worker‘s ability to plan work and to go ahead with a task without being told every detail, and the ability to make constructive suggestions.
Di plays unusual drive and perseverance, anticipates needed
actions, frequently suggests better ways of doing things
A self starter, proceeds on own with little or no direction, progressive,
makes some suggestions for improvement
Very good performance, shows initiative in completing tasks Does not proceed on own, waits for direction, routine worker Lack in initiative, less than satisfactory performance 6-5-4 3-2 1
Judgment: Here the management looks about the judgment power of the workers, the extent to which the employee makes decisions which are sound. Ability to base decisions on fact rather than emotion. Here rating system is:
Uses exceptionally good judgment when analyzing facts and solving problems= 9 (highest) Uses poor judgment when dealing with people and situations = 1 (lowest) Handles most situations very well and makes sound decisions under normal circumstances = 4-6 (moderate)
Cooperation: Cooperation is one of the major ingredients for the achievement of the target goals. So the management gives the rate to appraise the performance of the workers. Actually
they find the willingness to work harmoniously with others in getting a job done. Readiness to respond positively to instructions and procedures.
Elements Extremely cooperative, stimulates teamwork and good attitude in others Goes out of the way to cooperate and get along Cooperative gets along well with others. Indifferent, makes little effort to cooperate or is disruptive to the overall Rate 9 8-7 6-5-4 3-2
Group or department
Negative and hard to get along with 1
Attendance: Attendance is the important factor to perform well. Low absenteeism can ensure the high productivity of the workers. So management is very conscious about the faithfulness in coming to work daily and conforming to scheduled work hours.
Elements Always regular and prompt, perfect attendance, absent only in rare emergency Very prompt and regular in attendance, above average, pre-planned absences. Usually present and on time, normally pre-planned absences Lax in attendance and/or reporting on time, improvement needed to meet Rate 9 8-7 6-5-4 3-2
Often absent without sufficient reason and/or frequently reports to work late or leaves early 1
The following issues are considered only for supervisory personnel: Planning and organizing: Effective planning and organizing are the pre conditions for the goal achievement of the organizations. The ability to analyze work, goal setting, developing action plan, time utilization, requirement of supervision etc are considered to measure the performance of supervisory personnel.
Elements Exceptionally good planning and organizing skills, conscientious Rate 9
Above average planning and organizing, usually carries out assignments conscientiously
Average planning and organizing, occasionally requires assistance Room for improvement, frequently requires assistance Unacceptable directing and controlling skills
6-5-4 3-2 1
Directing and controlling: Directing and controlling power is also measured. It is very important that how well a supervisor can direct and control his/her employees. Here the considering issues are:
The ability to create a motivating climate Achievement of teamwork, Training and development Taking the corrective actions.
SIBL follows the following rating system:
Elements Exceptional leader, others lookup to this employee Above average, usually but not always motivational Average, sometimes needs to be reminded to leadership role Rate 9 8-7 6-5-4
Needs to improve motivational and team work skills
Unacceptable directing and controlling skills
Decision-making: The appraisal committee of SIBL, in case of supervisory personnel, appraises the ability to make decisions and the quality and timeliness of those decisions. SIBL follows the following rating system:
Elements Exceptional decision making abilities, decisions are made in timely manner Above average decision making abilities, usually makes sound and timely decisions Average, sometimes requires assistance in making decisions Rate 9 8-7 6-5-4
Needs to improve decision making and/ or timeliness of decisions
Unacceptable decisions and/ or timeliness
Distinguished (9): Truly outstanding performance that results in extraordinary and exceptional accomplishments with significant contributions to objectives of the department, division, group or company Commendable (8-7) consistently generates results above those expected of the position. Contributes in a superior manner to innovations both technical and functional. Fully satisfactory (6-5-4) Good performance with incumbent fulfilling all position requirements and many on occasion generates results above those expected of the position. Needs improvement (3-2): Performance levels room for improvement. This performance level may be the result of new or inexperienced incumbent on the job or an incumbent not responding favorably to instruction. Marginal (1): Lowest performance level which is clearly less than acceptable, and which is obviously well below minimum position requirements. Situation requires immediate review and action. Possible separation or reassignment is in order without significant and performance improvement. 4.2.3. Performance Appraisal for rating management skills: Definition of performance rating: Exceptional: Employee consistently exceeds performance objectives with virtually no detected preventable / controllable errors. S/he makes significant contributions well beyond normal job responsibilities. Individual requires little direction or supervision. Exceeds objectives: Employee exceeds performance objectives on a regular basis. Employee is making a valuable contribution to the company. Errors are infrequent and typically detected and corrected by employee. Expected performance: Employee consistently meets but does not exceed performance objectives. Employee is fully competent and is satisfactorily performing job. Marginal / needs improvement: Employee does not adequately accomplish objectives nor fulfill all responsibilities; must improve performance within a designated time period. Or, the employee is new to the position and tasks presently assigned are adequately performed as expected. Unsatisfactory: Unacceptable performance, below exceptions. Employee does not accomplish most or all position objectives. Methods used those behaviors that are critical to job success. Job knowledge: Technical knowledge and skills, analytical ability, problem solving skills. Communications: Verbal and written communications, presentation skills, and listening skills. Are communications clear, concise, courteous?
Quality of work: Accuracy, neatness, thoroughness, completeness of work. Quantity of work: Work output, speed, timeliness, effectiveness, work habits. Dependability: How reliable is the employee in completing assignments and meeting deadlines? Attendance? Punctuality? Interpersonal skills: Does employee work harmoniously and effectively with subordinates, peers, supervisors, and the public? Team player? Shares information with others as needed? Resolves conflicts? Welcomes and seeks constructive feedback on own performance? Cooperative ? Initiative: Does employee work independently? Solves problems? Assumes additional responsibility? Looks for more efficient and cost effective ways? Adaptability: Is employee able to adjust to a variety of situations? Flexible? Decision making: Use logical and sound judgment. Performance improvements: Briefly identify areas showing improvement or areas that required attention from last review. Appraisal of Management skills: This section should be completed on those employees who have supervisory responsibilities. Use the comment section to explain strengths and weakness in each area. List specific action needed to correct any deficiencies.
1. Planning and organizing: Forecasting, setting objectives, anticipating changes, securing and budgeting resources, structuring tasks, establishing priorities. 2. 2. Leadership:
Ability to take charge. Select, direct, and coordinate activities of others to do better work, assume more responsibility, or prepare for future job opportunities. Coach, motivate, and develop others. Serve as a role model. Make decisions, communicate.
1. 3. control :
Select control points, measure and report results, evaluate and correct performance, direct policy and procedure, operate within budget. Overall performance rating: The appraisal committee will consider all performance criteria and indicate overall rating, using definitions of performance levels as a guide.
Exceptional Exceeds objectives Expected performance Marginal / needs improvement Unsatisfactory
5.0 Analysis and Findings 5.1Strengths of the process:
The performance appraisal system used by SIBL has some strength which has been identified through HRM manuals of the bank and interviewing different level of employees (approx. 15 persons) of the bank. These are like as below:
Strengths Identification This process is able to Demonstrates competence in required job skills and knowledge, attendance, punctuality, time management, accuracy, clarity, consistency and thoroughness of work at a time. This process can provide a very concise picture of performance of different level of employees. The end report of the process is easy to understand for further decision making. This process also takes into account the human factors of the employees. The process could be able to generate a feedback for continuous improvement of work. No. of Employees told 8 % of Employees 53%
6 7 9 9
40% 46% 60% 60%
5.2 Weakness of the process: The performance appraisal system used by SIBL has some limitation like as below:
Strengths Identification This process does not have any peer to peer evaluation system. This process considers only a few human factors. In some cases, this system takes a much longer time to generate end report. This system is not completely impartial. No. of Employees told 12 9 7 8 % of Employees 80% 60% 46% 53%
6.0 Conclusion and Recommendation 6.2 Recommendations: The performance appraisal system has to be based on clearly specified and measurable standards and indicators. Goals have to be consistent and mutually decided by the employee and management. But this practice is not available in SIBL. If necessary, the appraisal system could be directed towards a particular client. The appraisal system has to
be reliable and consistent, and should include both objective and subjective ratings. The appraisal format should be practical and simple. The process should
be participatory and open. It should be linked with rewards. Feedback is an important part of appraisal, and has to be timely, impersonal andnoticeable. 1. 360 Degree performance appraisal method: The Company may follow 360 Degree performance appraisal method. In this method, employee is evaluated by his/her peers, subordinates, superior, etc. in this method; there is the less scope to be biased.
2. Management by objectives (MOB): SIBL may follow this method. In this method the employees are asked to set or help set their own performance goals. This avoids the feeling among employees that they are being judged by unfairly high standards. 3. Work standard approach: This method is very fruitful. SIBL may follow this approach. In this technique, management establishes the goals openly and sets targets against realistic output standards. These standards are incorporated into the organizational performance appraisal system. Thus each employee has a clear understanding of their duties and knows well what is expected of them. Performance appraisal and interview comments are related to these duties. This makes the appraisal process objective and more accurate. 4. Assessment problems: It is difficult to observe behavior and interpret it in terms of its causes, effects and desirability. Rating behavior on an appraisal form is quite difficult. The human element plays a significant role in the appraisal process and introduces subjectivity and bias. This can be minimized by documenting basing training criteria performance for the from evaluation on time to observable time; behavior; and
effectively communicating the expectations which management has of staff. 6.1Conclusion: Performance appraisals are one of the most effective supervisory tools to communicate expectations, provide feedback, plan work, acknowledge contributions, and help employees gain the skills to be successful. As SIBL is committed to do away with disparity and establish justice in the economy, trade, commerce and industry, build socio economic infrastructure and create employment opportunities. So SIBL should do justice with the employees while appraising them perfectly on the basis of their performance. The appraisal system has to be reliable and consistent, and should include both objective and subjective ratings. The appraisal format should be practical and simple. The process should be participatory and open. It should be linked with rewards. Feedback is an important part of appraisal, and has to be timely, impersonal and noticeable. It should be noted that an appraisal system can be effective only if it is accepted by employees and if management is fully committed.
. Introduction:axim bank In today‘s world only academic education does make a student perfect to become competitive with the corporate & Global business world. By doing an internship program, a student can get the opportunity to learn facing about real business world. Internship is highly needed to gain idea knowledge and experience. I am a BBA graduate from the Stamford University Bangladesh one of the reputed and largest Private University in Bangladesh. It has designed its curriculum of the BBA Program such a way that the international standard graduates will be produced. After completing my 139 Credit hours I Need to go for further professional experience through Internship program in a Business organization EXIM Bank Ltd. is a place where I have learned the business dealings. This organization has created a positive image to the customer‘s mind by providing better service specifically I am telling about the Panthapath Branch. This branch has introduced an exclusive modern banking system that has got high market sharing and rating in the prominent business & banking avenue in Panthapath Bank way. As an BBA Internee Office I have tried to maintain the pace with the competitive business environment on official Activities Culture Philosophy Norms & Styles. It should be reflect the best at any field of my Professional life; The Vice President & Manger is my overall Guide Philosopher & Superior. By receiving his all sorts of cordial support I have been availed the opportunity to work with this branch for three months from 10th January 2010 to 9th March 2010. I acquired idea about real business and corporate world. 1.2 Objective of the Report: Prime objects to a large-scale study on Banking System. 1.3 General objective of the Report: The report specification based on the overall banking performance evaluation and special focus on foreign exchange division of EXIM Bank Ltd. 1.4 Specific objective of the Report: To apply theoretical knowledge in the practical field.
To make a bridge between the theories and practical procedures of banking day-to-day operations. To Trend To An know the different modes of the the major financial financial activity of the scheme, in EXIM Bank. scheme. of of EXIM bank. Bank
different activity and practices
To identify the strategies for EXIM Bank Limited, implementing in constant prosperity of the company
Analyzing To To give
the some present idea
performance about its
trends management of
of and EXIM
EXIM organization Bank
Bank. structure Ltd.
Compare the different mode of scheme of Exim Bank with other similar bank. 1.5 Scope of the Report: First the report presents about the current economic condition of Bangladesh and the present condition of the banking sector of our country and next it gives some ideas about EXIM Bank Ltd. Then it analyzes the performance of the bank based on financial analysis and SWOT analysis. After that, it emphasizes or foreign exchange division. By reading this report one can easily have some ideas about the performance and foreign exchange division of EXIM Bank Ltd. 1.6 Limitations of the Report: Although there were sincere co-operation from employees of EX1M Bank Limited, Panthapath Branch, they could not manage enough time to provide the necessary information for the completion of the report. During the preparation of the report the following problems occurred that may be termed the as Bank‘s the limitation policy or shortcomings disclosing of the some study. data
Some of the limitations faced in preparing this report are: Confidentiality restricts
Data about the performance of the bank of the year 2008 have not yet been disclosed by the bank. The study of such a short course of time is not free from limitation.
The data relevant for the analysis report writing sometimes could not be collected due to excessive year-ending workload at the branch.
It is too much difficult to comment and suggest based on only the annual report and information collected from written documents.
As some assumptions were made with the help of limited information, there may be some personal mistake in the report
It was very difficult to collect the information from various incumbents for the job restriction. 1.7 Methodology of the Study: Although there were so many limitations, it was tried to use both the primary and secondary sources of collecting information to make the report presentable with as less abstraction as possible. 1.8 Sources of Information: Two sources (i) Primary & (ii) Secondary
A. Primary data: Primary data is always known as survey data. This type of data is collected from the respondent. For this personal Interview with the offices and customers have been conducted. B. Secondary Data: Data that were published before for some other reason can be collected using internal and external sources. i) Internal secondary data: To furnish the report properly some papers has been collected from the officials of EXIM Bank Ltd. Information from annual reports journals, newspapers and other published documents have been used besides other published information about the organization, depth interview of the branch manager and second branch manager have also taken. ii) External Secondary data: For better interpretation some data has been collected from Bangladesh Bank. Internet Browsing is also one source of external Secondary data. 2. ECONOMIC CONDITIONS IN BANGLADESH Bangladesh has an agrarian economy with 32% of GDP coming from the Agriculture Sector. Major agricultural products are rice, jute, wheat, potato, pulses, tobacco, tea and sugarcane. . The country is the largest exporter of jute and jute goods in the world. Readymade garments are among the most exportable items. Tea, frozen shrimp, fish, leather goods and handicrafts are also major exportable commodities. The country has under gone a major shift in its economic philosophy and management in recent years. At Bangladesh‘s birth, the country embraced socialism as the economic ideology with a dominant role for the public sector. But, since the mid-seventies, it undertook a major restructuring towards establishing a market economy with emphasis on private sector-led economic growth. During the nineties, the country has completed a major stabilization program which has reduced inflation as well as fiscal and current account deficits and established a healthy foreign exchange reserve position with low and sustainable debt-service liabilities. With modest economic growth, the basic indicators related to health, education and poverty have all shown sustained improvement. According to a World Bank estimate, Bangladesh has the 36th largest economy in the world in terms of GNP based on the purchasing power parity method of valuation, and the 55th largest in terms of nominal GNP in U.S. Dollars. Bangladesh economy grew on an average at above 6.0 percent in the last four years up to FY07 . According to the provisional estimates of the Bangladesh Bureau of Statistics (BBS),real GDP recorded a strong growth of 6.5 percent in FY07,which is marginally lower than 6.6percent recorded in FY06 . This growth was commendable as it was achieved in challenging environment marked by high and volatile oil price ,phasing out of the MFA quota, labour unrest
in the garment industry and confrontational political situation of the country in the first half of FY07. With reasonable support from agriculture sector, the 6.5percent real GDP growth was underpinned mainly by industry sector and services sector. The expansion was broad based, registering positive growth by all sectors and sub-sectors of the economy. Spurred by a robust 9.5 percent growth in industry sector and 6.7 percent growth in services sector, GDP growth during the year was also aided by 3.2 percent growth in the agriculture sector. The domestic savings-investment gap was met with net factor income from abroad which increased by 37.0 percent in FY07 from 4.4 percent in FY06 reflecting higher savings growth. The domestic savings investment gap was met with net factor income from abroad which increased by 37.0 percent in FY07. The rising trend of inflation of FY06 as measured by CPI continued in FY07 mainly due to higher prices of oil and some other imported goods in the international market, distortion in the supply side factors and demand pressure generated from excess money supply .Slower import of consumer necessities pulling their domestic prices heightened the price pressures. Annual average CPI (base FY96) inflation as of end June 2007was 7.20 percent, compared to 7.16 percent as of end June 2006. There was notable increase of food prices component of CPI inflation from 7.8 percent as of end June 2006 to 8.1 percent as of end June 2007. Maintaining a favorable investment environment and a sound macroeconomic management are important to strengthen private sector investment in the economy. In view of medium term outlook of sustainable economic growth and low inflation for world and south Asian economies and assuming continuation of prudent policies and progress in advancing structural reforms, the near and medium term economic prospects of Bangladesh appear favorable. 3. INDUSTRY ANALYSIS Bank plays an important role in this modern world. The development of industries and business sectors of a country mainly depends on good banking system. The industries and businessman are taking short and long term loan from banks. In the modern world international businesses are fully depended on banks. Without sound banking system no country can develop in international trade. Bank constitutes an important segment of the financial infrastructure of any country. The economic history of many countries reveals that economic development and growth of financial infrastructure go hand in hand. Financial system of a country is the heart of a country‘s economic system as it connects suppliers of the funds and demanders of fund, which is needed to produce economic goods. It also provides a large arena of employment opportunity. As
Bangladesh is containing a bank base economy, its economic development is largely depended on the development of banking sectors. Bangladesh appeared as a new nation on the world map in the year 1971. After independence financial institutions, especially banks played a vital role in re-constructing the war-torn economy of Bangladesh. Bangladesh Bank is the central bank of the country and is in charge of monetary policies of the Government and controls all commercial banks.‖ Development and growth of our banking system may be divided into three parts. The performance of our banking system during 1972 to 1982 was commendable in respect of expending network and providing easy credit to the socially desirable sectors but equally frustrating with regard to maintaining validity and customer services. The second phase from 1983 to 1989 was characterized by denationalization and privatization of banking system without broad-basing the prudential and information regulatory framework; however, these measures of denationalization and privatization could not bring the viability and operational efficiency of banking system. Under the above circumstances and with the recommendation of World Bank, a Financial Sector Reform Project (FSRP) was undertaken in 1989 by the government, which can be identified with third phase of the development of our banking system. The government of Bangladesh has also enacted some important acts namely financial institutions act 1993, Securities and Exchange Commission act 1993, the companies‘ act 1994 and recently Bankruptcy act 1997. The present day banking structure has evolved over several decodes. The far-reaching program of economic reform is being carried out at present towards efficient utilization of scare resources and the development of private entrepreneurship. Banks are financial service firms, producing and selling professional management of the public‘s fund as well as performing many other roles in the economy. Banks are those financial institutions that offer the widest rang of financial functions of any business firm in the economy. Competition is strengthened by the entry of new and innovative provides of financial services, through the development of Money market and Capital market. Money market is designed for the making of short-term loans where individuals and institutions with temporary surplus of funds meet borrowers who have temporary cash shortages. Capital market is deigned to finance long-term loans where individuals and institutions with temporary surplus of finds meet borrowers who have temporary cash shortages. Capital market is designed to finance long-term investments. Private sector commercial banks are private companies operate under the legislative framework, which covers both Company Act, and Banking Company Act, under the ongoing financial liberalization, EXIM Bank emerges as a new Bank in private sector to operate
at the Banking arena of Bangladesh It is committed to provide high quality financial services/ products to contribute to the growth of GDP of the country through stimulating trade and commerce, accelerating the pace of industrialization, boosting up export, creating employment opportunity for the educated youth , poverty alleviation, raising standard of living of limited income group and overall sustainable socio-economic development of the country. 4. COMPANY ANALYSIS 4.1 HISTORICAL BACKGROUND OF THE EXIM BANK EXIM Bank- Export Import Bank of Bangladesh Ltd. was named at first as BEXIM Bank BEXIM stands for Bengal Export Import of Bangladesh. This new commercial Bank was opened in August 03, 1999 with some new innovative visions in customer services. The Bank received the certificate of incorporate no.C-37864 (2164)/99 under the commencement of the business on the same day by the section 150(2) under companies Act. A part from the head office in Dilkusha C/A, it stared its first local branch in Motijheel C/A simultaneously in order to provide all kinds of Banking support to the clients. On December 02, 1999 the second branches both in Dhaka City and other cities. Now it has twenty-five branches in the country. 4.2 VISION The gist of EXIM bank vision is ‗Together Towards Tomorrow‘. Export Import Bank of Bangladesh Limbed believes in togetherness with its customers, in its march or the road to growth and progress with services. To achieve the desired goal, there will be pursuit of excellence at all stages with a climate of continuous improvement, because, in EXIM Bank, they believe, the line of excellence is never ending. Bank‘s strategic plans and networking will strengthen its competitive edge over others in rapidly changing competitive environments. Their personalized qualities services to the customers with the trend of constant improvement will be cornerstone achieve their operational success. 4.3 MISSION
The bank has checked out the following corporate objectives in order to ensure smooth achievement To be the most caring of and customer friendly its and service oriented goalsbank.
To create a technology base most efficient banking environment for its customers To ensure ethics and transparency in ail levels
To ensure sustainable growth and establish full value of the honorable shareholders and Above all, to add effective contribution to the national economy
Eventually the bank also emphasize on:
Provide Providing Maintaining Being Making Display Sound
trade service ethics
corporate repository products team of customers‘
and money and
business their to financial the
and spirit Capital
Fulfilling its social commitments by expanding its charitable and humanitarian activities 4.4 Objective Bangladesh is now integral part of global market. As such there is an urgent requirement for Bangladesh to place the traditional banking pretties in harness with the global trades of a free market economy by following international banking customs, practices and standards. Today clients of a bank in Bangladesh are exposed as well as international markets. They have to stay update with their practice and standards to meet the demands of achieving harmony in the high standards of a free economy. EXIM Bank fully appreciates the importance and implication of the rapidly emerging competition in the banking and finance sector of Bangladesh. It intends financing its customer suited to his or her place in the market. In this regards EXIM Bank emphasizes in its employment the software aspects of human resource capability. It also emphasizes competence among its banking professional to cater to vary customer requirements to the modern time. The objectives of EXIM BANK is not only to earn profit but also to keep the social commitment and to ensure its co-operation to the person of alt level, to the businessman, industrialist specially who are engaged in establishing large-scale industry by consortium and the agrobased export oriented medium and small scale industries by self inspiration. EXIM BANK is always ready to maintain highest quality of services by upgrading banking technology prudence inmanagement and by applying high standard of business ethic through its established commitment and heritage. EXIM BANK is committed to ensure its contribution to national economy by increasing its profitability through professional and disciplined growth strategy for its customer and by creating corporate culture in international banking area. 4.5 Strategy In order to reach the goal it is important to build strategy and follow the policies. If it can select the appropriate strategy and choose the right policy, it will be very easy to touch its desired
position. The distinguishing attribute of policy is to set the over all boundaries for activities. According to this system when the bank was started it has to decide what kind of business it is going to be in. The Bank also has to decide on its growth and communicate through am system of major objective of the business is to reach the goal, to reach the desired position from the current status. There might be a number of ways to reach there and its has to be decided which path would be easier to reach the objective. So the authority has no decided which path they select to proceed. The following figure can be explained clearly. Slogan of the EXIM Bank: ―Local Bank Global Network‖ The world EXIM implies the meaning of its operation. Through it is a new type of Bank in Bangladesh; it is familiar with so many countries in the world such as Export Import Bank of the United States, Export Import Bank of Japan. Despite it is a local Bank, It has spread of its operation in the whole world through foreign Banking. To achieve the desired goal, it has intention to pursuit f excellence at stages with a climate of continuous improvement. Because it believes, the line of excellence is never ending. It also believes that its strategic plans and business networking will strength its competitive edge over in rapidly changing competitive environment. It motto I to provide quality service to the customers all over the world so, the slogan of the Bank ―Local Bank Global Network‖ is completely adjustable with its operation. THE GENERAL BANKING DIVISION Internship has provided the opportunity to coordinate the theoretical knowledge that one has gathered in MBA Class with the practical field. Although three months is not a very long period to learn the whole thing that usually occurs in an organization. The supervisor divided this report into three parts. 1) The general banking department 2) The Investment department 3) The foreign Exchange department. Learning experience from General Banking Division: The main business of this Division is dealing with Deposit. There are two types of Deposit in this Branch and General Banking division as the following section: 1. 2. 3. 4. 5. 6. Customer Cash Deposit Account Remittance Clearing Service section section Section section section section and
7. Information Technology section
Task 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
Opening Modaraba Deposit Modarada Fixed Demand Telegraphic Payment Travelers Term foreign short
Monthly Deposit current notice
saving Account Deposit Deposit Steady Draft Transfer Order Check
scheme, Current Account (STD). Money. (D.D) (T.T) (P/O) (T.C)
11. Issuing Check. Pay Order (PO):
Pay order is one kind of unconditional promissory note or instrument that is issued by the Bank to the customer. The difference between check and pay order is the mode of encasement. Demand Draft:
Demand Drafts are made for the transfer of money from one place to another in the form of cheques through a particular Bank, which can be ensued right way. The Bank issues DD for their outer district branches. Telegraph/ Telephone Transfer:
When a certain amount of money is asked by the client to transfer from one branch to another than it is called telegraph/ telephone transfer. For TT, there is a particular from. When the form is filled up properly and deposits the amount by the applicant, the authorized officer issued a cost memo to the application for their confirmation. lssuing cheques Books:
Checkbook issue is a very sensitive because most of the fraud occurs through this checkbook. Customer requiring check books to fill out requisition ship. For saving accounts 10 pages check book issued and CD/SOD/ CC accounts issued 25 and 50 pages checkbook. Cash Section: In clearing section the work is to clear the cheques, DD‘s and PO‘s th rough Bangladesh Bank that are submitted for cash collection. Everyday morning
House another in the evening called return house. In the hose all the Banks representative sit together and exchanges their money receive instrument of their particular bank to clear the paper and transfer to money the paper partlcular accounts.
Type of Clearing: There 1) 2) Out –Ward Incalled In – Ward Clearing. OutWard: ward: is two type of clearing In-Ward
Those Cheques or instrument of EXIM, which are submitted to other banks for collections are
The cheques of other banks that are submitted to the EXIM for collections are called out-ward Clearing. Cash Section: Cash is the main element of all financial activities. The cash section of any branch plays very significant role. It‘s very sensitive place of the branch, because it deals with most liquid assets. The EXIM Bank Mirpur Branch has an equipped cash section. This section receives cash from depositors/Client and pays cash against cheques draft, payment order and pay to slip over the counter This section deals with all type as of negotiable instruments and in includes volt. Used as the store of cash instrument, the main functions of the sections are cash receipt and cash disbursement. Accounts Opening Section: This section deals with opening of different types of accounts. It is also deals with issuing of books and different deposit boos to the different accounts opener. A customer can open different types of accounts through this department such as: l. 2. 3. 4. 5. 6. 7. 8. 9. Multi Super Fixed Short Monthly Monthly saving income Smart plus saving Current Saving deposit term Scheme scheme saver saving account Deposit (Money (Steady Account Account (FDR) (STD) Grover) money) Scheme Account scheme
10. Education saving scheme EXIM l. Bank gives special saving importance various deposit (money schemes are:
2. 3. 4 5. 6. 7. Types Current
income plus Super Double Smart
Money) A/C scheme Scheme Scheme
saving benefit saver Education saving Terms and
And of Accounts
Scheme Conditions Account:
Current account is purely a demand deposit account. There is no restriction on withdrawing money from the account. It is basically justified when funds are to be collected and money is to be paid at frequent interval. Some Important Points are as follows• • • No Minimum There interest is opening is given deposit no upon the of TK.1000/withdrawal deposited is required; limit. money;
• Minimum Tk.1000/= balance must always maintain all the time. Savings (SB) Account:
The bank provides savings account services for the ease of its clients. It offers both personal and corporate Savings Account to its clients in every branch. Hence, there is a restriction on withdrawals in a month. Heavy withdrawals are permitted only against prior notice. Some Important Points are as follows• • Minimum Minimum Tk. opening 1000/= deposit balance must of Tk.5000/= always maintain is all required; the time;
• Withdrawal amount should not be more than 1/4th of the total balance at a time and limit twice in a month. • If withdrawal amount exceed 1/4th of the total balance at a time no interest is given upon the deposited • The current money rate on for deposit that amount is month. 6%.
• Closing of saving accounts will cost 300tk to a customer. Short Term Deposit (STD) Account:
Normally various big companies, organizations, Government Departments keep money in STD account. Frequent withdrawal is discouraged and requires prior notice. The deposit should be kept for at least seven days to get interest. The interest offered for STD is less than that of savings deposit. Interest is calculated based on daily minimum product and paid two times in a year. Interest rate is 4.50%.
Sometime the banker secures funds from the money markets usually from other bankers against receipt to meet his purely tepmorary shortage of funds. These debts are repayable immediately at call. When the money market is tight such derosits attract higher rate of interst and then to be treated as banker‘s borrowings as call loans. Account opening:
To dill with the bank individuals need to have an account first. The particulars are essential for identification of the account holders individually so that the banker can discharge his obligations to every one correctly and to the extent due. Documents □ 1. 2. 3. 4. □ 1. 2. Two Introduction photographs of the Joint Two required Individual Introduction photographs Identity Declaration of the / of signatories (copy Form Partnership of signatories duly the attested by the (For duly for opening Joint the attested of joint a/c by the account Account: account. introducer. passport). only).
5. Employee‘s Certificate (in case of service holder). account: account. introducer.
3. Partnership letter duly signed by all partners (Sign should be similar as stated in Partnership Deed). 4. 5. 6. Updated Trade license. □ 1. 2. 3. 4. 5. 6. 8. 1. TIN Identity □ Introduction of (Copy Limited the Two Introduction photographs Valid of the copy Rubber number of Proprietorship of signatories duly of the attested by the account: account. introducer. License. stamp. certificate. passport). company: account. Partnership Deed Registration duly certified (If by Notary public. any).
7. Permission letter from DC/ Magistrate (in case of newspaper)
4. Board resolution of opening A/C duly certified by the Chairman/Managing Director. 5. 6. Certificate of Certificate Commencement (In case of of Public limited Incorporation. company).
7. Certified (joint stock) true copy of the Memorandum and Article of Association of the Company 8. List duly of attested directors along by with Chairman designation or & Managing specimen Director. signature.
9. Latest certified copy of Form – xii (to be certified by register of joint stock companies) (In case of Directorship change).
10. Rubber Stamp (Seal with designation of each person) 11. Certificate of registration (In case of Insurance Company – Obtained from department of Insurance from the Peoples Republic of BD). □ 1. 2. 3. 4. 5. 6. Two Board Club Introduction photographs Resolution List of for of Registration Rubber the / of Signatories A/C duly duly societies the attested by by the account: account. introducer. Secretary. Committee. any). Stamp.
7. Permission letter from Bureau of N.G.O. (In case of N.G.O. A/C). Savings • • • • • Monthly • Hajj Scheme Finance/Loans: • • • • • Hire Commercial Corporate Industrial Lease Purchase Finance Finance Finance Finance Loans Super Savings Monthly Multiplus Smart Saving Scheme (Money Income Scheme; Scheme Savings saver Scheme Grower)
• • • • • Loan against Share and Securities • Step The An Officials account should be properly Account
Project Syndicate Retail Mortgage Opening
Finance Loans Loans Loans Procedures: 1
following: Bank. officer.
existing of the
Current Bank not
Account below the
holder rank of
A respectable person of the locality well known to the Manager/Sub-Manager of the Branch concerned. Step 2 Receiving filled up application in bank‘s prescribed form mentioning what type of account is desired Step The form is filled up by the applicant himself / to be opened. 3 herself
Two copies of passport size photographs from individual are taken, in case of firms photographs Applicants Application Introducer‘s Step Authorized Step Minimum Step Account is opened and a Cheque book and pay-in-slip book is given Account Sections: Daily function: The 1. 2. 3. routine daily tasks the the the daily of daily the accounts transactions in branch department in the and of are as cash subsidiary deposit follows: book ledgers and cash balance is deposited – only cash is Officer accepts the must of must sign and signature all submit specimen accounts signature number – partners required sheet and by give legal are taken documents mandate officer 4 application 5 accepted 6
Recording Recording Preparing
transactions of the
4. Preparing the daily statement of affairs showing all the assists and liability of the branch as per 5. ledger Making payment and of subsidiary all expenses leader of the separately. Branch
6. Recording inters branch fund transfer and providing accounting treatment in this regard. 7. Checking whether all the vouchers are correctly passed to ensure the
Conformity with the Activity Report; if otherwise making it correct by calling the respective official 8. Recording to of the rectify vouchers in the the Voucher voucher. Register
9. Packing of the correct vouchers according to the debit voucher and the credit voucher. Periodical Tasks: The 1. 2. routine Preparing Publishing periodical the tasks monthly the performed salary basic by the department for of are the the as follows.
3. Preparing the weekly position for the branch this is sent to the Head Office to maintain Cast Reserve requirement
4. Preparing the monthly position for the branch, this is sent to the Head office to maintain statuary liquidity requirement.
5. Preparing the weekly position for the branch comprising of the break up of sector wise deposit, credit etc.
6. Preparing the weekly position for the branch comprising of the denomination wise statement of cash in tills.
7. Preparing the budget for the branch by fixing the target regarding profit and deposit so as to take necessary steps to general and mobilize deposit 8. Preparing an Extract‘ which is a summary of all the transactions of the Head Office account with the branch to reconcile all the transaction held among the accounts of all the branches. General Account: General account is important one, which has to be maintained by each branch. Indeed general account is are record of Oregonian and responding transactions among inter- branches of the same bank. All types of assets and liabilities of one branch with another one are settled through this account. Branch can know how much the bank is liable with Head Office. The debit and credit balance shows assets and liabilities of the respective branch. Statement or Affairs:
Accounts section prepares the statement of affairs for finding the profit/ loss as well as amount of assets and liabilities of concerned branch per day
2. Statement of Assets and Liabilities Amortization and Depreciation:
Amortization is the allocation of the cost of an intangible asset to expense for example, prepaid expenditure, prepaid insurance and good will etc Amortization schedule is determined by the decision of management. Establishment: This section deals with employee‘s salary, much type of internal expenses such as purchase of pen, paper equipment, machinery and payment of labor Cost and employee conveyance. In cause of leave of absence employee collects prescribed from this section. LOANS AND ADVANCES DEPARTMENT Introduction: Banking is essentially a business dealing organization with money and credit like all other business activates. Banks are profit-oriented organization. A bank invites its find many ways to earn more and more profit and most of its income is derived from loans and advances. Bank makes loans and advances to traders, Businesspersons, industrialists and many other persons against security of some cautions policy and sound lending principle in the matter of lending. EXIM Bank is a lending bank in loans and advances and it grant loans in various sectors especially in industry, trade and commerce. Types of loans and advances: There may be different types of loans and advance given from the commercial banks such as EXIM Bank Ltd. Of our country. Loans and advances may be in the following types: 1. 2. 3. 4. 5. 6. 7. 8. 9. Term Loan Brief Idea about the different types of loans and advance: Loan Loan Loan House Transportation Building (Car) Consumer against Bills against Imported purchases Other loan loan (General (only credit Merchandise Documentary Securities for and senior Cash credit Overdraft Staff) staff) Scheme (LIM) (LBPD) (LAOS)
Cash credit is an arrangement by which the customer is allowed to borrow May up to a creation limit. This permanent arrangement and the customers need not to draw the sanctioned amount of money at a time. The borrower can draw the money when required. The borrower can put back any surplus, amount, which he/she may he affect frequently. Intersect is charged only to the amount with drawn and not he whore amount sanctioned cash credit arrangement is usually divide 1. 2. Cash into Cash Cash Credit two ways credit credit such as: pledge hypothecation Pledge:
In case of cash credit pledge possession of the goods dealings to bank and ownership of the of the goods belongs to borrower and bank the possessions of the goods as primary security. The goods storied in go down under lock and key by direct supervision of the bank. If the borrower wants to sell any potion of the pledged goods he/she permission of bank with returning the value of the loan amount. It is therefore regarded as the most secured type of advance. Cash Credit hypothecation:
In case of cash Credit hypothecation possession of the goods not transferred to the bank and therefore such and advance is no better than a clean loan, such an advance can thus only be granted to a person in whose integrity the barked has full confidence cash credit in the form of Hypothecation is normally accompanied with mortgagee of immovable properties. The pray/ borrower possesses the lock and key of the down. The Formalities of opening cash Credit:
There intending cash credit holder should submit the following documents and being fill up properly: 1. 2. 3. 4. 5. 6. 7. 8. 9. DP Letter Letter Letter Letter (Demand of Up to date Stock repot, Trade income Charge of of Promissory) tax clearings rend receipt license certificate documents Continuity arrangement note guarantee lien
11. Non-Encumbrance Certificate Observing the documents the bank authority prepares a cc proposal from that contains the following information: 1. 2. 3. 4. 5. Number nil it Turn Transition Allied of adjustment that is Nature Banking with deposit (s) how debit from many CD account with times the of with by SB/STD CC holder to points the made the business EXIM client account. his/her balance. view. account
Account Higher 7.
6. Recycling it is ration of total credit summation to the limit. If the ratio is banker‘s in
8. By the encasement authority the bank holds the power to encase the FDR the encasement authority at any time in case borrower‘s failure to repay the loan amount with interest in due time. Based in the above-mentioned information the dealing officer of the loans and advances department prepares recommendation about the prospect of granting the CC loan to the client. Overdraft: Overdraft is an arrangement between the banker and the customer by which the letter is allowed to withdraw over his/her credit balance in the current account up to an agreed limit. The borrower is permitted for draw and repays any number of times, provided he total amount overdrawn dose not exceeds the agreed limit. Here the interest is charged only for the amount withdrawn over the limit. Not for the whole amount. Overdraft is divided into tow categories: ■ ■ Secured overdraft: It Secured Temporary is allowed against the overdraft overdraft full security (i.e. FDR, (SOD) (TOD) ICB unit
Certificates). Temporary Overdraft: It is allowed to the customer for a very short period of time. But EXIM bank Car deals only secured overdraft. Loans:
This is a special type of loan, which is only provided for the staff of EXIM Bank. Usually AVP and above level officers get this kind facility. This loan is reimbursed on instrument basis and repayable after each month.
House General ■ ■
Building house building
loan loan is
(General providing into
Staff): sectors: Generally Staff
Naturally house building loan is paid for the construction of commercial building, and owners etc, ■ ■ ■ ■ Required ■ ■ ■ Copy Copy Copy papers of for general of of Application procedures for sanctioning filled net up for worth Enquiry sanctioning power material engineer‘s HB of housefor credit facilities statement building loan as follows:loan by the bank. director form loan: attorney certificate estimate Application properly Personal sectioning supplied each
■ Copy of projected cash flow Loan (General):
In case of loan the banks sanction some of money for a certain period of time. The enter amount is one time disbursement and paid in cash or credit loan A/C.
The interest is charged on full sanctioned amount @16%. The bank generally sanctions loan to establish industry. These types of loan are granted for capital expenditure such as purchase of land, constriction of factory building, purchase of new machinery and modernization of plant. The borrower cannot withdraw this type of loan once repaid in full or in part again. Formalities for extending project loan: Loan application form:
After receiving the loan application from the borrower the branch scrutinizes the application whether it is viable or not. Loan application from contains the following particulars amongst other ■ ■ ■ ■ ■ ■ Detail Detail Statements Project of information Particular Nature information assets about cost and liabilities and detail description of about of the of the the borrower and with of the below: Project. Project borrower declaration etc fund.
This report is provided by the borrower, which includes the following aspects of the project: aspect aspect
1. Categories of Loans- At first all loans and advances will be grouped into four categories for the purpose of classification, such as- (a) Continuous Loans (b) Demand Loans (c) Fixed Term Loans and (d) Short Term and Agriculture & Micro Credit. (a) Continuous Loans : The loan A/C in which transaction may be made within a certain limit and have an expiry date for full adjustment will be treated as continuous loan. Exp CC, OD etc. (b) Demand Loans: The loan that becomes repayable by the party on demand by his bank will be treated as demand loans. If any contingent or any other liabilities are turned into forced loan will also be treated as demand loan. Exp. LIM, PAD, FBP, IBP etc. (c) Fixed Term Loans: The loan which is repayable with in the specific time period under a pacific repayment schedule will be treated as Fixed Term Loans. (d) Short Term Agriculture & Micro Credit: Short Term Agricultural Credit will be as per list issued by Agricultural Credit and Specialized Programmers Department (ACSPD) of Bangladesh Bank under the Agricultural Credit Programmed. Credit in the Agricultural sector repayable within 1(one) year will also be included herein. Short Term Micro Credit includes any micro credit not exceeding TK. 25,000.00 and repayable within 12 months. 2) Basis for Loan Classification: (A) Objective Criteria (1) Past due/ over due: In this point we saw four factors those are;
a) Any continuous loan if not repaid / renewed within the fixed expiry date for repayment be treated as past due/ overdue from the following day of the expiry date. any demands loan if not repaid/ rescheduled within the fixed expiry date will be treated as past due/ overdue from the following day of the expiry date. b) In case any installment of a fixed term loan (repayable within fives) is not repaid within the fixed expiry date, the amount of unpaid installment will be treated as past due/ overdue (defaulted instilment) from the following day of the expiry date of the particular installment.
c) Incase of any installment or part installment of a Fixed Term Loan (repayable over five years) is not repaid within the fixed expiry date, the amount of unpaid installment will be treated as past due/ overdue after 6(six) months of the expiry date of that particular installment. d) The Short Term Agriculture & Micro Credit if not repaid within the fixed expiry date for repayment will be considered as past due/ over due (defaulted instilment) after 6(six) month of the expiry date. (B) Qualitative Judgment; If any uncertainty or doubt arises in respect of recovery of any continuous,
Demand or Term Loans the same will have to be classified as Sub- Standard or Doubtful or Bad/ Loss. Considering the merit of the A/C on the basis of qualitative judgment be it classified or not on the basis of objective criteria. The Bank will classify on the basis of qualitative judgment and can be- classify loans if qualitative improvement does occur. But if a loan classified by Bangladesh Bank inspection Team, the same can be de- classified with the approval of the Board of Directors of the Banks. CIB Report: Before making credit report to the head office the lending branch takes the credit information to the borrower from the CIB (credit Information Bureau) of Bangladesh Bank and other financial institutions. For obtaining this report the branch sends Inquiry form‘ to CIB duly filled in particulars of the borrower. The report id divided into 5 segments. Project appraisal: It is the reinvestment analysis done by Banker before a project is approved. Project appraisal in the ■To ■To Banking ensue achieve sector is the needed of for the following Bank reasons: finance goals repayment
■To establish industrialists in a country. The main tasks of the project appraisal is to justify the soundness of an investment by the Banker by means of a capital and systematic of the different elements of the Project For this purpose ■Lending ■Spread Sheet Analysis (SSA) Lending risk analysis: Lending risk analysis is modern methodologies, which describes how to access the risks that are inherent any credit extension and how to access the likelihood that the customer will repay a loan. The LRA form contains 16 pages to analysis different categories of Risks. The Financial Banks use Risk two types Analysis of analysis: (LRA)
Sector Reform project introduces the lending Risk analysis format in 1993. LRA is a standardize format for analyzing the credit worthiness of a borrower and the likelihood that the borrow will repay. Bangladesh bank issued a letter number BCD (p) 611/13/290 dated 17-07-1994, which now makes it mandatory for the commercial Banks to implement the LRA approach to credit analysis prior to extending credit facilities to a Borrower. The modern concept of lending is purpose and production oriented and not security oriented. The emphasis should be given not any security rather on he likelihood of repayment, the credit worthiness of the customer soundness and viability of the business etc. Lending Principles The Principle of lending is a collection of certain accepted time tested standards, which ensure the proper use of Investment fund in a profitable way and its timely recovery. Different authors describe 1. 2. 3. 4. 5. Diversity Process of Investment Heads Characteristics Adequate different principles for sound lending. Safety Security Liquidity yield
Application Applicant applies for the Investment in the prescribed form of the bank describing the types and purpose of Investment.
Sanction 1. Collecting credit information about the applicant to determine the credit worthiness of the borrower. Sources of information
2. Personal Investigation, Confidential Report from other bank, Head Office/Branch/Chamber of Commerce. 3. i. ii. CIB (Central of Information Bureau) report with its proposed from Central lending Bank. policy. security.
4. LRA is must for the Investment exceeding one crore – as ordered by Bangladesh Bank. 5. If everything is in accordance the Investment is sanctioned
Documentation a. Then bank prepare a Investment proposal which contains terms and conditions b. Takes of the Investment necessary for approval and of H.O. or from Manager. borrower
Disbursement An Investment Account is opened. Where customer A/C———————————
——————————————————Dr. Respective Investment A/C —————————————-Cr. FOREIGN EXCHANGE DEPARTMENT Introduction: One of the largest businesses carried out by the commercial bank is foreign trading. The trade among various countries fills for close link between the parties dealing in trade. The situation calls for expertise in the field of foreign exchange operations. The bank, which provides such operations refereed to as rending international Banking operation. Mainly trisections with overseas countries are respects of import, export and foreign remittance come under the preview of foreign exchange transaction, and international trade demands a flow of goods from seller to buyer of payment from buyer to seller. In this case the Bank plays a vital role to bridge between the buyer and seller. Foreign Exchange Mechanism in Flow Chart: Sales/Purchase contract Issues Forward Forward documents Makes payment Makes payment Foreign Exchange department of EXIM Bank is department of all departments. This department handles 1. 2. 3. Foreign Remittance. Import Section: The functions are of the section is mainly to deal with various components such as ■ ■ ■ Letter Payment Payment against of against Trust Credit Document Receipt (L/C) (PAD) (PTR) various types of activates Import Export by three separate sections: Section section L/C
■ Loan against Imported Merchandise (LIM) Letter of Credit (L/C): Definition: A letter of credit can be defined as an arrangement where in a Bank Guarantee on behalf of these customers to make payments to the beneficiary upon presentation of documents specified in the credit. Parties involved in L/C:
The person who opens the L/C is known as opener/ buyer/importer of the L/C. The buyer and the seller conclude a sales contract providing for payment by documentary credit. 0pening Bank:
The Bank issuing the L/C in favor of exporter is known as opening Bank. The opening bank opens L/C on request of importer according to application of the importer. Advising Bank:
The Bank through L/C is advised their agent (correspondent Bank) abroad. The duty of the advising Bank is to authenticate the message so that is to the seller can act on it without any fear of forgery etc. Beneficiary: Seller and exporter in whose favor the L/C are opened. The beneficiary is normally the seller of good who receive payment under documentary credit. If has compiled with terms and conditions thereof. Negotiating Bank:
The Bank that is authorized to handle (purchase) the documents under the L/C in the exporting country is known as negotiating Bank. L/C will stipulate either a notified bank to negotiate (restricted L/C) or any bank can negotiate in the seller‘s country (unrestricted L/C). Reimbursing Bank:
The Bank that is (by the L/C issuing Bank) to effect reimbursement is known as reimbursing bank. Reimbursing Bank authorized to honor the reimbursement claims in settlement of negotiation/ accepting/ payments lodged with its by the paying/ negotiating/ accepting Bank. Confirming Bank:
A Confirming Bank is one which adds the guarantee to the credit opened by another bank. Therese undertaking the responsibility of payment/ negotiating/ acceptance under the credit in addition to that of the issuing Bank. A confirming Bank normally does so it requested by the issuing Bank. Types Back Revocable/ Confirmed/ Transferable to Acceptance Revolving back of irrevocable unconfirmed L/C: L/C L/C. L/C L/C L/C L/C
- Green close L/C
The EXIM Bank basically deals with irrevocable L/c. which can not be amended or cancelled by the issuing Bank at any moment and without prior to the beneficiary.
It also deals back to back L/C, which is the letter of credit, provided by the exporter to the import the raw materials from abroad in order to produce the exportable commodity for the importer. Procedures for opening L/C: Application An importer who is for desirous to import goods opening from foreign country will L/C: apply
Issuing Bank for opening a L/C. The importer will provide an application mentioning the following aspects: ○ ○ ○ ○ ○ ○ ○ Name Amount Amount Term of Full particulars Types Historical of of of imported required L/C L/C of applications of Bank account. business background limit margin. payment goods
○ Repayment schedule and source of fund Document An ○ ○ ○ ○ ○ ○ ○ Four VAT Tex Insurance importer or schedule L/C Import Pro-forma sets of cover registration registration IMP opener from Application and has to source submit registration the by of following the fund. documents Bank) certificate invoice from not number number
○ Letter of credit authorization form Examination for opening L/C: Application must be carefully checked by the concerned officer considering the facts mentioning below: ▪The terms and conditions of L/C applications are consistent with exchange control and import trade resolution UCPDC 500.
▪Illegibility ▪The ▪That ▪ ▪Goods ▪Whether ▪Whether are not ▪Insurance is L/C signed must by of the Indenting
of be importer and note is form is up duly opened and agreed to
imported in with be registration vassals with to filled used are of date up or and not of date favor the terms of and
goods importer conditions. number Israel shipment. not singed
cover RC IMP
▪The imported goods are marketable After scrutinizing all thee legal aspects necessary entry is given to the margin register and charge, commission and margin in realized. Transmitting the L/C: The L/C is transmitted to the advising Bank for advising the L/C to he beneficiary. L/C is generally transmitted through tested Telex of Fax. Before transmission of final examination of the L/C contents is necessary for the issuing Bank. It is customary to advice a credit to the beneficiary through advising Bank. Advising Bank after receiving L/C documents informs to the beneficiary for receiving L/C. Add Confirmation: Very often advising Banks received request from the issuing Bank to add their conformation while advising credit to the beneficiary. The advising can do it if there is prior arrangement between advising and issuing bank or if it feels that the issuing Bank is repute reliable and institution and good enough to discharge this obligation. Amendment o f L/C:
In case of revocable L/C amendment is brought without prior notice of the beneficiary-issuing Bank. But in cage of irrevocable L/C prior notice of the beneficiary is essential. Issuing Bank will accept amendment of the L/C after getting consent of both importer and exporter. Payment against Document (PAD):
The issuing, Bank starts (PAD) procedure after getting all necessary documents from the exporter as evidence of export in goods. Documents required for PAD is mentioned below: ○Original ○Commercial ○Certificate ○Certificate of of (non-negotiable) bill of landing invoice insurance origin
○Bill ○Pre-shipment ○packing ○clean report of Finding (CRF) Examination of PAD documents:
exchange certificate list
Scrutinizing documents is very important for the issuing Bank. As after Examining all the documents the issuing Bank will make payment to the Negotiation Bank. So, any mistake in the examination process may cost issuing Bank. Examining the bill of exchange: ■It ■It ■L/C ■Amount ■Amount ■Examining ■It ■It ■Price, ■It ■Invoice is is dated, quality, must must be bear in words the addressed signed quality prepared L/C and etc in authorization and is drawn is a duly signed on by the the market import quoted is in to submitted in figures commercial the required is indicating indicating on as the him beneficiary draw. it. identical same invoice importer number drawn number
■Tenors of the draft are strictly in conformity with the terms stipulated in the L/C.
■It must bear detailed description of goods that must tally with L/C and bill of landing is the and corresponded language other to of L/C. L/C. number.
■Charge relevant to merchandise is included in the invoice and is permitted by the L/C. Examination of transport document: ■It ■Date is presented of in full set of on negotiable the and bill non-negotiable of copies. landing. shipment
■Bill of landing must be made out in the name of Bank notify the importer. ■Description of goods in the bill of landing must agree with invoice and L/C. ■Port of shipment and destination is as per L/C. ■Bill of landing is singed by shipping company or their agent. Examination of other document: Weight lists, inspection certificate, quality certificate, certificate of origin, packing list etc. should agree with L/C terms and conditions and also signed by the appropriate authority. These certificates are usually dated before the date of shipment.
Common Following ■Late ■Late ■one ■Tenor ■Inconsistent ■Absence are ■Inadequate
discrepancies the common number shipment of goods of
the found in of
import the documents
document: operation: invoice shipment L/C terms of of lading. L/C. wrong. presented documents
transshipment unsigned are or not not dated as
beyond on per draft the
documents of some
If any major discrepancies found in the documents it is informed to the buyer for his/her opinion. If discrepancies and are minor retirement then of these import are overlooked document:
Date of payments: Usually payment is given within 7 days of documents received. Otherwise incase of documents purchased by negotiating Bank it may claim for interest.
Intimation letter: Before payment intimation letter is given to the International department for arranging ■Receive ■Checking ■Entry ■Vouching ■Posting ■Sending credit advice of necessary all documents of of of to the head fund kinds as PAD PAD before of per L/C final payment. documents terms registers register voucher officer
■Informing importer about receiving documents. Loan against Trust Receipt (LTR): There may be situation where storage of collateral in an independently controlled filled where house is impractical and improper may require the Goods for further processing of for display the merchandise in order to make the final sale. In such cases a financing institution that as a great degree of trust in the importer may be willing to release the negotiable bill of landing and thereby also the good to the importer against the signing of trust receipt. After the importer has made his/her final sale and received the proceeds, he/her can pay the financing institution that he/ she received as advance. Loan against imported Merchandise (LIM):
If the importer does not come to negotiate the shipping documents from the issuing Bank then it creates LIM though the Bank clears the goods from the port and holds the goods in its go down. Beside the above as soon as the imported goods come to the port the party may fall into financial crisis and requests the Bank to clear the goods from the port making payment to the exporter. In this case the party late may take the goods partly or fully from the Bank by making require payment (if he/ she takes the goods time to time payment will be adjusted simultaneously). Export section: This section negotiates the export documents and collects and purchases the export in relation to ○Pre-shipment ○Post shipment finance Export finance arises from trade between two traders trading in two different countries. A brief idea of the both categories is given below: Pre-shipment finance: When an exporter intends to ship the goods to an oversea buyer he/ she need fund for purchasing goods to be exported. He/ she may also depend upon the bank for arranging credit for he supplies of goods. Post shipment finance: Post shipment finance is more concerned with Banks than pre-shipment finance. This type of finance starts after the goods have already been shipped. export credit. finance
Function of export section: Export ■Back ■Foreign ■Foreign ■Local ■Secured ■Export ■pacing ■Accepted Bills Payable (ABP) Back to Back L/C Open: It is secondary letter of credit opened by the advising bank in favor of a domestic/ foreign supplier on behalf of the beneficiary originals foreign L/C. section performs to Document Document Documentary Overdraft Cash Credit Bill Bill Bill different Back for for for (SOD) credit types of tasks L/C Collection purchase purchase such as: open (FDBC) (FDBP) (LDBP) export (ECC) (PC)
As the original letter of credit of Bank by import letter, it is called back to back L/C. The second L/C is opened on he strength of the original for a smaller amount i.e. maxlmum75% is shipped under lien and 10% under packing credit. There is three of Back L/C opened by EXIM bank of Bangladesh ltd. Back to Back L/C (Foreign): When the BTB L/c is opened in a foreign country supplier it is called BTB L/C (Foreign). It is general payable within 120 days at sight. Back to Back L/C (EDF): EDF stands for Export development fund that is provided by the ADB to Bangladesh Bank for Export promotion of 3′d world country like Bangladesh. When the Bank is not in a position to support the amount of Back L/C then apply for loans to the Bangladesh Bank for Back L/C (EDF). Back to Back L/C (Local): When the Back to Back L/C is opened for local purchase of materials is called Back to Back L/C (Local). It is generally payable within 90 days at sight. Procedures for Back to Back L/C: □Exporter □Exporter □Opening □Terms □That □That □That □That on there and the L/C the is is export no should L/C of conditions customer issued L/C apply or Back for has as negotiation for Blank for master Back V to Back credit per clause to to under Back Back lien UCPAD in of Back is L/C. lien. L/C. L/C. facility. 500. present. B/1.
□That payment clause is thereon the L/C issuing Bank ensuring payment. Consideration for a back L/C. ▪Whether ▪Consider client the can expiry manufacture date within and the time shipment period date. ▪The unit of the finished pro-forma invoice should be considering while allowing margin. ▪On-side inspection whether manufacturing is carried out. Payment under Back to Back L/C: Deferred payment is made in cause of Back to Back L/C as 6, 90,120,180 date of maturity period. Payment will be given after realizing export proceeds from the L/C issuing Bank from the abroad.
Reporting of Bangladesh Bank: At the end of every month reporting of Bangladesh Bank is mandatory regarding the whole months export operation. The procedures in this respect are as follows: ■To fill up the E-e schedule of S-l category. The whole month import amount, quality, goods category, country, currency etc. all are mentioned. Respective IMP forms are also attached with the scheduled IMP IMP is to is fill skipped up to with the the E-3/P-3 Bank Bank for with along all with invisible the Bill payment. value. entry. of ■Original ■Duplicate forwarded Bangladesh mentioning novice
Export Procedures: A person desirous to exports should apply to obtain ERC from CCLNE. Then the person should take step for export purpose into he Bank for obtaining EXP from. He/ she must submit the following documents: ■Trade ■ERC ■Certificate from concerned government organization After satisfaction on the documents the Banker will issue EXP from to the Exporter. Now the exporter will be getting shipping and other documents from the shipment procedure. Exporter should submit all these documents alone with letter of indemnity to the Bank for negotiation. Documents of Export: Following major documents are required for export purpose. ■Commercial ■Bill ■EXP ■Bill ■L/C ■Packing ■Certificate ■Quality ■Weight ■Inspection Certificate. Procedures for collection of export Bill: There Foreign are two types of procedures Bill regarding for collection collection of export Bill of control of of invoice. lading. from. exchange. Copy. list. origin. certificate. list. license
Foreign Documentary bill for Purchase (EDBP).
Foreign Documentary bill for Collection (FDBC): Exporter cans collection the Bill through negotiating banks on the basis of collection. Exporter in this case will submit al the documents to the negotiating Bank for collection of Bill from inspector, the exporter will get money only when the issuing Bank gives payment. In this connection Bank will scrutinize all the documents as per terms and conditions mentioned in L/C. FDBC Register: Entry given twice in this register -When document is forwarded to the issuing Bank.
-When proceeds realized. Foreign Documentary Bill for purchase (FDBP) When exporter sale all the export documents to the negotiating Bank it is as FDBP. In this case the exporter will submit all the documents to the Bank. The Bank gives 60%-80% amounts to the exporter against total L/C value. Local Documentary Bill for purchase (LDBP): ◊Incoming ◊Documents ◊Scrutinizing ◊Forward ◊L/C issuing documents the Bank gives of LIC customer given as documents per to and acceptance L/C L/C forward with the L/C with terms and opening acceptance to negotiate. L/C. conditions. Bank. letter.
◊Payment given to the party by collection basis or by purchasing documents. Packing Credit (PC): It is one kind of credit sanctioned by export department to meet the exported goods shipment timely. The Bank will give the facility after decoction of Back to Back L/C from total L/C value. Secured Overdraft (SOD): Secured overdraft is one kind of facility enjoying by the exporter from the export section. It is generally given to meet the Back to Back L/C claim Sometimes it is given to the exporter by force for meeting the Back to Back L/C claim due to delay of Master L/C payment. Foreign remittance section: Different funds are mobilized form foreign country to our thought the foreign remittance section. Purchase of foreign currencies constitutes inward foreign remittance and sales of foreign currencies constitute outward foreign remittance. EXIM Bank has a rich environment where funds flow from different countries. The transaction of the authorized dealer in foreign exchange involves either inward or outward remittances of foreign exchange between the tow countries
EXIM Bank bas authorize dealership. Different branch of EXIM Bank such as Motijheel branch, Mirpur branch etc. is providing the foreign remittance services to its customers. But EXIM Bank Gazipur chowrasta branch has no authorized dealership. For this reason this branch can not provide the foreign remittance services to its customer. EXIM Banks foreign remittance facilities include FBC, LFBC purchase and sales of FCY, FTT, and traveler cheque, FBP. Way ■NOSTRO ■VOSTRO ■LORO Account Nostro Account: An Account of the branch named which in a multinational Bank for the Transferring of the fund called NOSTRO Accounts. Just this account use only this Branch \/ostro Account: VOSTRO Account is the opposite of NOSTRO Accounts where a multinational Bank maintains account in the local Bank to meet the requirements of sending fund. These accounts are not use able. Remittance There 1. 2. Outward remittance. 1. Inward Foreign Remittance: are procedures two Inward of types foreign of currency: remittance: remittance of transferring the funds: Account Account
Inward remittance covers purchase of foreign currency in the form of foreign T.T., D.D, and bills, T.C. etc. sent from abroad favoring a beneficiary in Bangladesh. Purchase of foreign exchange is to be reported to Exchange control Department of Bangladesh bank on Form-C. 2. Outward Foreign Remittance: Outward remittance covers sales of foreign currency through issuing foreign T.T. Drafts, Travelers Check etc. as well as sell of foreign exchange under L/C and against import bills retired. Working 1. 2. 3. 4. 5. F/C Account opening &filing. The remittance process involves the following four modes Issuance Issuance of FDD, of of FTT TC, & this Cash purchasing, Dollar Payment of the department: /Pound same.
Dollar/ Pound Sell Bank sells Dollar / Pound for using in abroad by the purchaser. The maximum amount of such sell is mentioned in the Bangladesh Bank publication of ‗Convertibility of Taka for Currency Transactions in Bangladesh‘. Purchase Bank can purchase dollar from resident and non – resident Bangladeshi and Foreigner. Most dollars purchased comes from realization of Export Bill of Exchange. Traveler‘s Cheque
(TC) Issue of TC TC is useful to traveler abroad. Customers can encash the TC in abroad from the drawee bank. TC is alternative to holding cash and it provides better security than holding cash Buying Of TC If any unused leaf of TC is surrendered bank buys it from the customer. All payments are made in local currency. Banks generally buy only those TC. in hand.
Telex Transfer Outward TT It remits fund by tested TT via its foreign correspondence bank in which it is maintaining its NOSTRO Account.
Incoming TT It also makes payment according to telegraphic message of its foreign correspondence bank from the corresponding VOSTRO Account.
Foreign Demand Draft Bank issue Demand Draft in favor of purchaser or any other according to instruction of purchaser. The payee can collect it for the drawee bank in which the Issuing bank of Demand Draft holds its NOSTRO Account. Bank also makes payment on DD drawn on this bank by its foreign correspondence bank through the VOSTRO Account. Telegraphic Transfer (TT): TT is one of the important tools of transferring foreign currency from one country to another. The persona who wants to send TT to the abroad at first he/ has to submit an application from duly mentioned it TT amount and he /she has to deposit amount mentioned in voucher to the cash department. It is generally performed by the Bank branch through their respective NOSTRO account who is maintaining any foreign Bank account outside the country. The originating Bank sends a message to the paying foreign Bank for making payment against the mentioned TT accounts number. The foreign make payments to the party and also make debit account against respective Bank. At him same time foreign Bank send advice to head office ID division for acknowledging the debited amount. Head officer ID division sends debit advice to the respective branch for acknowledging the payment. Outward remittance Outward remittance includes sales of TC and FC notes etc.
Dales of IC and FC notes: To get TC and FC notes at least the customer has to submit an application from Filling up the required column, which is formatted by the Bank, is caped T/M from. After checking up the from the desk officer passes voucher and issues a TC and gives cash dollar to the customer. In both the cases the Bank endorse total amount in customer‘s passport. The Bankers required photocopy of customer‘s passport (page-l -7) and endorsement paper. The charge of endorsement taken by the branch is Tk. 200 only. Sale of TC and FC note amount varies from different countries: 5. COMPETITIVE POSITION OF EXPORT IMPORT BANK OF BANGLADESH LIMITED WITH PREMIER BANK LIMITED. The performance of the bank is more significant in both development and achievements of continuous growth rate in all the areas of banking operations. If we see the balance sheet of 2007 of Exim Bank Ltd., we can say that in all over Exim Bank Ltd. performing better than other banks in Bangladesh. In the year of 2007 the bank has successfully earned a pre-tax profit of Tk.1,618.80 Million registering an annual growth of 34.96% than that of the previous year. It has successfully mobilized Tk.41,546.57 million deposit from depositors and has arranged disbursement of Tk.40,195.24 million as investment through its 35 Branches. The return on assets after tax was 2% well above the banking-industry average. Below we compare the performance of Exim Bank Ltd. with Premier Bank Ltd. in some of the areas of banking operations. Capital Exim Amount in Million. Premier Amount in Million. Comparative Interpretation: Bank Ltd. and Bank Reserve Fund: Ltd.
Above the chart shows that capital and reserve fund of Exim Bank Ltd. is much better than the Premier Bank Ltd. Assets: Exim Amount in Million Premier Amount in Million Bank Ltd. Bank Ltd.
Assets position of Export Import Bank of Bangladesh Limited is good compare to Premier Bank Ltd. The growth rate of assets of Exim Bank Ltd. is better than the Premier Bank Ltd. For the year of 2007 the growth rate of assets of Exim Bank Ltd. was 23.23% instate of Premier Bank Ltd. Investment: Exim Amount Premier Amount in Million Comparative Interpretation: Bank in Bank Ltd. Million Ltd. 19.88%.
Investment of Exim Bank Ltd. is much better than the investment of Premier Bank Ltd. But the growth rate of investment of Premier Bank Ltd. is better than the Exim Bank Ltd. For the year of 2007 the growth rate of investment of Premier Bank Ltd. was 44.65% instate of Exim Bank Ltd. 23.83%. Foreign Trade Exim Amount in Million Premier Amount in Million Comparative Interpretation: Bank Ltd. Bank Ltd.
Foreign Trade business of Exim Bank Ltd. is much better than Premier Bank Ltd. Foreign Trade business of Exim Bank Ltd. increasing year by year but Foreign Trade business of Premier Bank Ltd. decrease in year 2007 from 2006.
Foreign Remittance Exim Amount in Million Premier Amount in Million Comparative Interpretation: Bank Ltd. Bank Ltd.
Foreign Remittance of Premier Bank Ltd. is much better than the Exim Bank Ltd. Although foreign remittance of Exim Bank Ltd. is increasing year by year but the Premier Bank Ltd foreign remittance receive amount always higher than the Exim Bank Ltd. Conclusion of Competitive Position:
From the above circumstances we can say that in overall Exim Bank Ltd. financial position is much better than the Premier Bank Ltd. Their reserve fund, asset position, investment position, foreign trade business, very well position rather than the Premier Bank Ltd. position. But foreign remittance position is not that much well. They should try to develop this sector and to develop the sector the bank need to take initiatives to make remittance arrangements with some leading exchange houses at abroad because foreign remittance effect the export-import business.. And Exim Bank Ltd. mainly focus on export-import business, that‘s way their name is Export Import Bank of Bangladesh Limited. 6.1 SWOT ANALYSIS SWOT analysis is the detailed study of an organization‘s exposure and potential in perspective of its. This facilitates the organization to make their existing line of performance and also foresee the future to improve their performance in comparison to their competitors. As though this tool, an organization can also study its current position, it can also be considered as an important tool for making changes in the strategic management of the organization. ―S‖ ―W‖ ―O‖ ―T‖ Strengths EXIM Bank Limited has already established a favorable reputation in the banking industry of the country. It is one of the leading private sector commercial banks in Bangladesh. The bank has already shown a tremendous growth in the profits and deposits sector. -STRENGTHS -WEAKNESS -OPPORTUNITIES -THREATS
EXIM Bank has provided its banking service with a top leadership and management position. The top management officials have all worked in reputed banks and their years of banking experience, skill, and expertise will continue to contribute towards further expansion of the bank. EXIM Bank Limited has already achieved a high growth rate accompanied by an impressive profit growth rate in 2007. The number of deposits and the loans and advances are also increasing rapidly.
EXIM Bank has an interactive corporate culture. The working environment is very friendly, interactive and informal. And, there are no hidden barriers or boundaries while communicate between the superior and the employees. This corporate culture provides as a great motivation factor among the employees.
EXIM Bank has the reputation of being the provider of good quality services too its, potential
customers. Weaknesses The main important thing is that the bank has no clear mission statement and strategic plan. The banks not have any long-term strategies of whether it wants to focus on retail banking or become a corporate bank. The path of the future should be determined now with a strong feasible strategic plan.
The bank failed to provide a strong quality-recruitment policy in the lower and some mid level position. As a result the services of the bank seem to be Deus in the present days. The poor service quality has become a major problem for the bank. The quality of the service at EXIM Bank is higher than the Dhaka Bank, Prime Bank or Dutch Bangla Bank etc. But the bank has to compete with the Multinational Bank located here.
Some of the job in EXIM Bank has no growth or advancement path. So lack of motivation exists in persons filling those positions. This is a weakness of EXIM Bank that it is having a group of unsatisfied employees.
In terms of promotional sector, EXIM Bank has to more emphasize on that. They have to follow aggressive Opportunities In order to reduce the business risk, EXIM Bank has to expand their business portfolio. The management can consider options of starting merchant banking or diversify into leasing and insurance sector. marketing campaign.
The activity in the secondary financial market has direct impact on the primary financial market. Banks operate in the primary financial market. Investment in the secondary market governs the national economic activity. Activity in the national economy controls the business of the bank. Opportunity in retail banking lies in the fact that the country increased population is gradually learning to adopt consumer finance. The bulk of our population is middle class. Different types of retail lending products have great appeal to this class. So a wide variety of retail lending products has a very large and easily pregnable market.
A large number of private banks coming into the market in the recent time. In this competitive environment EXIM Bank must expand its product line to enhance its sustainable competitive advantage. In that product line, they can introduce the ATM to compete with the local and the foreign bank. They can introduce credit card and debit card system for their potential customer. In addition of those things, EXIM Bank can introduce special corporate scheme for the corporate customer or officer who have an income level higher from the service holder. At the same time, they can introduce scheme or loan for various service holders. And the
scheme should be separate according to the professions, such as engineers, lawyers, doctors etc. Threats All sustaining multinational banks and upcoming foreign and private banks pose significant threats to EXIM Bank Limited. If that happens the intensity of competition will rise further and banks will have to develop strategies to compete against these local and foreign banks. The default risks of all term loans have to be minimized in order to sustain in the financial market. Because of default risk the organization may become bankrupt. EXIM Bank has to remain vigilant about this problem so that proactive strategies are taken to minimize this problem if not eliminate.
The low compensation package of the employees from mid level to lower level position is not able to keep the employee motivation. As a result, good quality employees leave the organization and it effects the organization as a whole. 6.2 RATIO ANALYSIS
Analyzing the financial performance (also called financial analysis) is so much essential for each and every business institution as well as for the Banking institutions to assess their past financial performance and to identify the sources, where the necessary improvement is needed to perform better in the future and to meet the future challenges by taking effective business strategy. Financial analysis typically is associated with ratio analysis. Ratio analysis involves the methods of calculating and interpreting the financial ratios to analyze the firm‘s relative financial performance. The main purpose of this analysis is to analyze and monitor the firm‘s financial performance, so, that the interested parties (both the external and internal) can realize the firm‘s actual performance easily and conveniently, which is so much essential for the parties. There are several ratios that help a particular analyst to analyze the past performance of a particular firm and to diagnose the various relevant variables, which are important for improving the future operation of that firm. The financial ratios, that are useful for analyzing the past financial performance Current Return Return Debt Ratio Now we are going to comparison above the ratio EXIM Bank Ltd. with Premier Bank Ltd. Current Ratio: A measure of liquidity, calculated by dividing the current assets by current liabilities. It shows the level of current assets that a particular firm has against per Taka of on on of a financial institution, such as Ratio Investment(ROI) Equity(ROE)
Current ratio = Current Assets / Current Liabilities Interpretation: We know that, the current ratio measures a firm‘s liquidity by measuring the portion of its current asset relative to its current liabilities and the higher the ratio, the higher the liquidity of the firm. So, after observing the graph shown above, it can be said that the company‘s current ratio is up warding year by year and Bank‘s current ratios are always below the standard level (2), which is not good and risky for the firm – EXIM Bank. In 2007 it was highest. But in the year 2005 to 2006 Bank‘s current ratio as well as the liquidity is increasing at slow rate, which is good for the Bank and the reason is that the Bank has maintained a steady level of current liabilities during this period of time. Interpretation: We know that, the current ratio measures a firm‘s liquidity by measuring the portion of its current asset relative to its current liabilities and the higher the ratio, the higher the liquidity of the firm. So, after observing the graph shown above, it can be said that the company‘s current ratio is up warding year by year and it is the highest in the year 2007. Comparative Interpretation: We know that, the current ratio measures a firm‘s liquidity by measuring the portion of its current asset relative to its current liabilities and the higher the ratio, the higher the liquidity of the firm. We can say that Premier Bank Ltd. current ratio is better than EXIM Bank Ltd. current ratio. Return on Investment (ROI): The Return on investment (ROI), which is often called the firm‘s return on total assets, measures the overall effectiveness of management in generating profits with its available assets. The higher the ratio, the better performance of the organization is ensured. It is calculated as follows: ROI = Net Profit after Tax / Total Asset Graphical Presentation Interpretation: After having a careful view on the graph I am able to say that the Bank‘s effecti veness to generate return by using its available assets is fluctuating year to year and the Bank has generated maximum amount of ROI in the year of 2007 and due to lack of efficiency in utilization of assets the Bank‘s ROI falls in the minimum level in the year of 2006. Graphical Presentation
Interpretation: We know that, The Return on investment (ROI), which is often called the firm‘s return on total assets, measures the overall effectiveness of management in generating profits with its available assets. In graphical presentation; the ROI is 0.0080 in the year 2005, increasing in 2006 and again decreasing in 2007. So bank should be concerned with this matter. Comparative Interpretation: We know that, The Return on investment (ROI), which is often called the firm‘s return on total assets, measures the overall effectiveness of management in generating profits with its available assets. After having a careful view on the above data, I am able to say that the Bank‘s effectiveness to generate return by using its available assets is fluctuating year to year. But comparatively EXIM Bank Ltd. ROI is much better than ROI of Premier Bank Ltd. Return on Equity (ROE): It measures the return earned by the funds invested by the common stockholders. It is calculated as follows:ROE=Net Profit after Tax/Shareholder‘s Equity EXIM Year Net Equity Profit Capital 2005 381798163 1,400,004,740 Bank 2006 555335174 1,912,421,914 Ltd. 2007 650,292,342 3,111,685,079
Ratio 29.04% 20.90% 23.03% Graphical Presentation Interpretation: The Company‘s return on equity is decreasing over the time, which is not good for the Bank. The EXIM Bank has generated maximum amount of ROE in the year 2003, which is 34.05% but after that, the Bank‘s ROE is decreasing year to year, which is not favourable fo r the EXIM Bank. The ROE is decreasing from the year 2004 to year 2006 as the amount of proposed dividend and paid up capital of the Bank has increased lot during this period of time but compare to that the amount of net profit is not increasing that much as the operating income of the Bank is increasing as the Bank as established some new branches during this period of time. Premier Year 2005 2006 Net Profit after Taxes Bank Stockholders‘ Equity 1133532329 1626109953 Return on Ltd. Equity .159 .226
2007 78756227 2465361210 .032
Graphical Presentation Interpretation: We know that, The Return of Equity (ROE) measures the return earned on the owner‘s (both preferred and common stockholders‘) investment. In graphical presentation; the ROE is increasing in 2006 and decreasing in 2007. So bank should be concerned with this matter. Comparative Interpretation: The Return of Equity (ROE) measures the return earned on the owner‘s (both preferred and common stockholders‘) investment. Generally, the higher this return, the better off the owner‘s. So, to see the above data we can say that ROE of EXIM Bank is better than the Premier Bank. Debt Ratios: The ratio analyzes a firm‘s debt position, which indicates the amount of other people‘ money being used in the firm to generate profits by measuring the portion of total asset financed This EXIM Year Total Total Liabilities Asset 2005 31,804,277,414 33,716,699328 ratio is by calculated as the follows:Debt Bank 2006 38,681,855383 41,793,540,962 firm‘s Ratio=Total Liabilities/Total creditor. Asset Ltd 2007 47,460,499,299 51,503,027,985
Ratio 94.33% 92.55% 92.15% Graphical Presentation Interpretation: After having a careful view on the graph, we can see that the company, EXIM Bank has financed on an average of above 94% of its total assets with debt in every year but from the year 2005 the Bank‘s debt position is started to fall, as the Bank is now emphasizing on equity capital financing and the Bank has lowest level of debt ratio in the year 2007 as the Bank has increased its paid up capital of Tk. 214.22 crore. Premier Year 2005 2006 Total Liabilities 21634309082 25544335980 Bank Total Assets 22767840000 27170450000 Debt Ltd. Ratio .95 .940
2007 30107825347 32573190000 .924 Graphical Presentation Interpretation: We know that, the debt-equity ratio indicates the relationship between the long-term funds
provided by creditors and those provided by the firm‘s owners. The results of debt ratio are low in 2005, lowest in 2006 and better in 2007.so bank recover the problem in last year. Comparative Interpretation: We know that, the debt ratio measures the proportion of total assets provided by the firm‘s creditors. So, after observing the both banks graph shown above, it can be said that the EXIM bank debt ratio is better than the Premier bank . Conclusion of Ratio Analysis:
Financial analysis typically is associated with ratio analysis. Ratio analysis involves the methods of calculating and interpreting the financial ratios to analyze the firm‘s relative financial performance. The main purpose of this analysis is to analyze and monitor the firm‘s financial performance, so, that the interested parties (both the external and internal) can realize the firm‘s actual performance easily and conveniently, which is so much essential for the parties. From the above circumstances we can say that, although all over performance of Exim Bank Ltd. is much better than the Premier Bank Ltd. but to develop more the bank need to develop and achieve continuous in all the areas of banking operations. Because the performance of the bank is more significant in both development and achievements of continuous growth rate in all the areas of banking operations. 10.1 ® There has computer-networking system between the branches of EXIM Bank. ® There is no training institute of EXIM Bank which is very much essential for employees for betterment for the job. ® Encoding and decoding process of test number consume most of time of the officer who works in that desk. But a simple computer program could do the same if the system computerized. ® Officer of the bank are competent even through may of them simply know the working procedure but they lack of the depth of knowledge about of that particular job that they are doing. ® The bank may give more to its customer better service if all of its departments are computerized and incorporated under local area network (LAN). ® Bank should provide advances towards the true entrepreneur with considering conventional system of security collateral; moreover the whole process should be completed within an expected time. 10.2 RECOMMENDATION FINDINGS
To get competitive advantage and to deliver quality service, top Management should try adapting the following service: 1. Credit card and automated teller Machines (ATM) should be introduces
As soon as possible. 2. EXIM Bank should develop E-Banking system. 3. EXIM Bank should develop its own networking system between braces
so that they can exchange their information pastier and efficiently. 4. EXIM Bank always should monitor the performance of its foreign trade. 5. EXIM Bank Ltd. Should focuses on their promotional activities & bank marketing. 6. They should also focus on the marketing aspect to late customer known
About their product and offerings and more components should be given on customer service to attract new customer. 7. Separate officers may be allotted for their special parties in the import and export division will maintain every work of then form L/C opening payment. 8. The branch Manager Officers and executives who achieved target in all respect may be rewarded. 9. Now days, Many well established banks give emphasis in advertisement of their existing products like Prime Bank, EBL etc. EXIM Bank should concentrate on this matter seriously. 10.3 CONCLUSION Export Import Bank of Bangladesh Limited is a third generation private commercial bank in the country Directed by the with mission to commendable provide prompt and operating efficient services performance to clients.
EXIM Bank has successfully celebrated its Tenth years of operation. It provides a wide rage of commercial banking services EXIM Bank has a achieved success among it peer group within a short span of time with its professional and dedicated team of management having long modern banking. With all its resources, the management of the Bank firmly believes that the bank would be able to encounter problem that my arise both at micro macro economic levels. The management of the Bank is maintaining an efficient portfolio in order to have a healthy growth and retain customer satisfaction. EXIM Bank is engaged in modern banking. It is expected that EXIM Bank by its efficient Asset and liability management will be able to maintain its trend of growth and thus overcome the treat.
Neither EXIM Bank having small and targeting niche markets is likely to be less affected by restrictive monetary and or fiscal policy. The Management of the Bank is planning to meet the
required capital adequacy withering the stipulated time frame, and a loan and advance policy that expected the loan loss provisioning in future will be within tolerable limit having little material impact on future profitability as well as net worth. A although EXIM Bank is yet to be fully automated the Bank has an adequate modern technology to meet its present requirement and it proceeding aggressively to enhance its technology level. As EXIM Bank is perforating good in traditional general banking and there is a good demand for Islamic Banking and the opinion of then (The Management) that the performance of the Bank is getting much better than past. I wish and hope that in future EXIM Bank will be number one commercial Bank in Bangladesh.
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