CHAPTER ONE

Introduction

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Introduction
Generally theoretical education as received from normal education institutions is
not sufficient to prepare a student to face a practical field. To make a student
aware with the practical field “Internship Program” is considered as the useful
step of acquiring managerial education. Undoubtedly it is a matter of joy that
International Islamic University Chittagong, which aims at producing the
learners with perfect knowledge, discipline and with moral values since its
establishment year 1995 under the private university act 1992.

As an intern I was appointed to Prime Bank Limited (O.R.Nizam Road) for three
months under the direct supervision of Mr. , Manager of the Branch.

This report mainly highlights on Prime Bank’s General Banking and Retail
Banking. The organizational structure of Prime Bank and its operation in
Chittagong as well as in Bangladesh have been exposed through this report,
which had been observed during the 3-months internship period.

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Objectives of the Study

Though the main objective of the internship is to prepare ourselves in such a

manner as though we can train ourselves with the practical field as well as we
will be able to know the different aspects of the banking sector and to evaluate
how bank is performing in investment sector specially in retail banking sector.
More especially the study was conducted fro the following objectives:
1. To highlight the PBL
2. To know about the general banking
3. To Know about the retail lending procedures
4. To show the financial performance of the bank.
5. To find out problems related with General Banking.
6. To give some suggestions to overcome the problems.

Methodology of the Study

The data needed for conducting the study has been collected from the primary
sources as well as secondary sources. In collecting the necessary data, care has
been taken so that all the variables that in some way can’t affect the objectives of
the study. The information of the study is collected by the following ways:
Primary data sources:
 Direct working with the officials of PBL.
 Face to face conversation with the client.
 Practical deskwork.
Secondary data sources:
 Bulletin published by the bank.
 Annual report of the bank.
 Previous research books and journals.
 Manual of the bank.
 Different book about banking.
 Teachers’ sheet.

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The data and information collected were processed and tabulated manually,
statistical tools namely average and percentage and financial tools for analysis,
the financial statement e.g. ratios were used in the study. The major portions of
the data sources have been collected from secondary data sources.

Scope of the Study

The study is only related to Prime Bank Limited O.R. Nizam Road Branch Ctg.
This report focuses on the over view of management, organizational structure
and mainly focus bank’s Retail Banking.

Limitations of the Study

Although I have got co-operation from employee of PBL and they also gave me
much time to make this report properly in the way of my study, I have faced
some problems that may be terms as the limitations/shortcoming of the study.

Time limits:
It should be certainly mentioned that the time constraints is that first limitation
of the study. Only three months is not sufficient for gathering perfect knowledge
on the vast area of banking activities especially on the retail banking.

Data Collection:
 In some cases the officials could not be able to supply my topic related
data for preparing a more in depth presentation.
 It was also seen that maximum time they were found busy and many
officers related tour topics were not able to give enough time and briefing
due to insufficient of time.
 The study also suffered from insufficiency of data provided by PBL.

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Lack of Practical Knowledge:
For the lack of practical knowledge, some shortcomings may be available in
the paper because in some cases we could not practically involved because of
bank’s limitations.

Personal Limitations
 Another problem is time limitation. For most of the day, I have worked in
PBL from 10:00 A.M. to 6:00 P.M. So I did not get enough time to write the
report.
 Sometimes I was assigned to do some jobs without explaining why this
work is to be done. This situation has created a lot of problems to
understand why a specific function is being performed.

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 CHAPTER TWO
An Overview Of Prime Bank Limited

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Introduction

Banks are most important financial institutions in the economy of the world. It is
a financial intermediary, whose principal operation is concerned with the
accumulation of the temporarily ideal money of the general public for the
purpose of advancing it to others for expenditure and offers the widest menu of
services of any financial institutions.

The term Bank originally referred to an organization, which acted as a money

changer exchanged one currency for another. According to Professor Sayers,
“Banks are institutions whose debt usually referred to as Bank Deposit- are
commonly accepted in final settlement of other people’s debts”.

According to Banking Regulation Act-1949-“ Banking means the accepting

money for the purpose of lending or investment of deposit of money from the
public repayable on demand or otherwise and withdrawal by cheques, drafts
order or otherwise”.

Modern banks play an important part in promoting economic development of

country. Banks provide necessary funds for executing various programs
underway in the process of economic development. They collect savings large
masses of people scattered through out the country, which in the absence of
banks would have remained idle and unproductive. These scattered amounts are
collected, pooled together and made available to commerce and industry for
meeting the requirements. Economy of Bangladesh is in the group of world’s
most undeveloped economies. One of the reasons may be its undeveloped
banking system. Govt. as well as different international organization have also
identified that undeveloped banking system causes some obstacles to the
process of economic development. So they have highly recommended for
reforming financial sector. Since 1990, Bangladesh Govt. has taken a lot of
financial sector reform measures for making financial sector as well as banking
sector more sound and transparent.

Banks perform the indispensable task of intermediating between the two groups
and offering convenient financial service to surplus-spending individuals and
institutions in order to attract fund and these loaning those fund deficit-
spending individual and institutions. Another contribution of bank make is their
willingness to accept risky loan from borrower, while using low risk securities to
their depositors. Bank also satisfies strong needs of customer liquidity. Bank

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satisfies these needs by offering high liquidity in the deposit they sell and in the
loan they provide. It is thus clear that the underlying principle of a business of
banking is that the resources mobilized through the acceptance of deposit must
contributes the main stream of funds which are to be utilized for lending or
investment purposes.

Background of PBL
Prime Bank Ltd. incorporated in 12th February 1995 and started operation in
17th April 1995. The sponsors are reputed personalities in the field of trade and
commerce and their stake ranges from shipping to textile and finance energy etc.
Prime Bank Ltd. has already made significant progress within a very short
period of its existence. The bank has been graded as a top class bank in the
country through internationally accepted CAMEL rating. The bank has already
occupied an enviable position among its competitors after achieving success in
all areas of business operation.

The bank has a network of 40 branches strategically located in different cities.

All the branches are functioning in computerized environment. And O.R. Nizam
ROAD IBB branch was started from 7th October 2003

As a fully licensed commercial bank, Prime Bank Ltd. is being managed by a

highly professional, prompt, and dedicated team with long experience in
banking. The constantly focus on understanding and anticipating customer
needs.

The bank has already occupied an enviable position among its competitors after
achieving success in all area of business operation. The growth of the deposit is
growing fast.

In a fast changing business environment financial intermediaries are gradually

being left Competition is intense by the entry of new and innovative providers
of financial services through the development of money market and capital
market. And to operate in commercial ground of Bangladesh Prime Bank Ltd
emerges as a new bank in the private sector with their vision.

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Vision
To be the best private Commercial Bank in Bangladesh in terms of efficiency,
capital satisfactoriness, asset quality, sound management and profitability
having strong liquidity. Quick client support is also one of their visions.

Mission
To build Prime Bank Limited into an efficient, market driven, customer focused
institution with good corporate governance structure.
Continuous improvement in the business policies and procedure and efficiency
through integration of technology at all levels.

Strategic Priority
To have constant growth, widen and improve range of products and services in
all areas of banking activities with the aim to add increased value to
shareholders investment and offer highest possible benefits to our customers.

Corporate Information
 Incorporation of the Company : 12th February 1995
 Formal launching of the Bank : 17th April 1995
 Initial Public Offering (IPO)
- Publication of Prospectus : 29th August 1999
- Subscription opened : 9th September 1999
- Subscription closed : 22nd September 1999
 Listed with Dhaka Stock Exchange Limited : 27th March 2000
 Listed with Chittagong Stock Exchange Limited: 15th November 2000
 Registered as Merchant Banker
With Securities & Exchange Commission : 29th March 2001
 License issued from Bangladesh Bank as Primary Dealer: 11 th December
2003.
 Registered with Depository Participant of CDBL : 29th March 2004

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 Managerial Hierarchy of PBL

Managing Director
Additional Managing Director

Senior Executive Vice President

Executive Vice President

Senior Vice President

Vice President

Senior Assistant Vice President

Assistant Vice President

Products

Deposit Credit
First Assistant Vice President
Accounts Schemes Funded Non Funded

SB Account CSS WC Doc Credit Bank Guarantee

Senior Executive Officer
FDR MBDS Project/ SME

L.F H.P.
STD Account DBDS
Executive Officer

FCD Account ESS T. Loan

NRT Account LDS Principal Officer Retail

NFCD Account HBDS Import/Export

Senior Officer
Pre shipment
PMS LC/BTB

Post Shipment

Officer
PAD(IMP)

LTR(Imp)
Junior Officer
Different Product Offered By PBL
P.C.( EXP)

Trainee Assistant
FDBP(EXP)

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LIM(IMP)
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Other services offered by PBL:

Remittance services : TT. DD. PO

Foreign trade service : Export, Import
Guarantee service : Inland Foreign Import –Export & Advance
Locker service : Presentation of valuables
Prime line : Online Branch Banking Service
Credit card : Master card
One stop services : Sales prize bond, all mobile bills received.

Departments of PBL
Prime Bank Ltd. offers all kinds of Commercial Corporate and Personal Banking
Services covering all segments of society within the framework of Banking
Company Act and rules and regulations lay down by our central bank.
Diversification of products and services include Corporate Banking, Retail
Banking and Consumer Banking right from industry to agriculture, and real
state to software. On the basis of these services there are two departments
consist in the bank.
 General Banking Department.
 Loans and Advance Department.

a) General banking department

General Banking department performs the majority functions of a Bank. It is the
core department. In fact, bank operates with the people’s money. And this
process starts with the General Banking department. The activity of the general
Banking department of PBL is mainly divided into the following sections:

I. Accounts Opening Section.

II. Deposit Schemes Section.
III. Remittance Section
IV. Online banking section
V. Clearing section.
VI. Collection Section.
VII. Cash Section.
VIII. Accounts section.

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ACCOUNTS OPENING SECTION:
To establish a Banker and customer relationship Account Opening is the first
step. Opening of an account binds the banker and customer into contractual
relationship. But selection of customer for opening an account is very crucial for
a Bank. Indeed, fraud and forgery of all kinds start by opening account. So, the
Bank takes extremely cautions measure in its selection of customers.
Procedure for opening of accounts:
Application on the prescribed form

Introduction of the customer by an account holder

Furnishing recent photographs (two)

Duly attested by the introducer

Add nationality certificate or passport copy

Mention nominee in the prescribed form

Furnishing nominee’s photograph

Signature of the prospective account holder in the account opening form

Transaction profile (KYC)

Allocation of account no by the officer

The customer then deposits the “initial deposit” by filling up a deposit slips
(Initial deposit to open a current account in PBL is Tk. 5000.00 and saving
account is Tk. 1000.00.)

Types of Account:
PBL has the following types of accounts:
1) Al Wadia current account
2) Mudaraba Savings Account
3) Mudaraba Short Term Deposit Account
4) Mudaraba Fixed Deposit Account
5) Foreign Currency Deposit account
6) Non Residence Foreign Currency Deposit Account
7) Non Residence Taka Account
Deposit Schemes Section

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Bank is the largest organization of savings. For poverty improvement, we need
self-employment, for self-employment we need investment and for investment
we need savings. In the other worlds, savings help capital formations and the
capital formations help investment in the country. The investment in its turn
helps industrialization lending towards creation of wealth of the country. And
the wealth finally takes the country on road to progress and prosperity.
Prime Bank formulated the following saving schemes:-
1) Mudaraba Contributory saving scheme (MCSS)
2) Double Benefit Deposit Scheme (DBS)
3) Mudaraba Hajj Saving Scheme (MHSS)
4) Mudaraba Monthly benefit deposit scheme (MMBDS)
5) Mudaraba Education saving scheme (MESS)
6) Prime Millionaire Scheme
7) Lakhopoti Deposit Scheme
8) House Building Deposit Scheme

Mudaraba Contributory Savings Scheme:

This is a Savings Scheme in which a person gets the opportunity to build up
savings by contributing monthly installments and receives an attractive fixed
amount at the end of a specified term.

The Scheme is designed to help the fixed income group to save money and build
up a sizable fund with which they can go for some income generating venture to
improve the quality of their life and/or meet any future financial obligations.

"On maturity, the terminal value and monthly return of the scheme may because
benefit will be calculated according to profit sharing/weightage."
Minimum size of monthly installment shall be Tk. 5007- and multiplies of Tk.
10001- Maximum installment size shall be Tk. 25,0007-.
• The Deposit shall be for a period of 5 years.
• Lump sum amount shall be paid after maturity or monthly Pension shall be
paid for the next 5 years according to the size of deposit. A brief chart
of lump sum amount and monthly pension installments payable are
shown below:

Size of monthly deposit Terminal value after 5 years Pension for next 5 years
/ (Taka) (Taka) (Taka)

5007- 40,0007- 8707-

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 1 ,0007- 80,0007- 1 ,7397-

2,0007- 1 ,60,0007- 3,4787-

3,0007- 2,40,0007- 5,2177-

4,0007- 3,20,0007- 6,9567-

5,0007- 4,00,0007- 8,6957-

6,0007- 4,80,0007- 10,4347-

7,0007- 5,60,0007- 12,1737-

8,0007- 6,40,0007- 13,9127-

9,0007- 7,20,0007- 15,6517-

10,0007- 8,00,0007- 17,3907-

1 1 ,0007- 8,80,0007- 19,1297-

12,0007- 9,60,0007- 20.868/-
13,0007- 10,40,0007- 22.607/-
14,0007- 11,20,0007- 24,346/-
15,0007- 12,00,0007- 26.085/-
16,0007- 12,80,0007- 27,824/-
17,0007- 13,60,0007- 29,563/-
18,0007- 14,40,0007- 31,3027-
1-9,0007- 15,20,0007- 33,0417-
20,0007- 16,00,0007- 34,7807-
21,0007- 16,80,0007- 36,5197-
22,0007- 17,60,0007- 38,2587-
23,0007- 18,40,0007- 39,9977-
24,0007- 19,20,0007- 41,7367-
25,0007- 20,00,0007- 43,4757-
 At present Income Tax on profit will not be applicable but in future for
any change in Govt. rule of taxation, the Bank reserves the right to deduct
Income Tax.
 The depositor will have the option to choose any installment size at the
time of opening of an Account and will not be allowed to change the size
of installment afterwards.
 Account in the name of minors can be opened too under the Scheme.

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  A person can open more than one account for different size of
installments at any branch of the Bank.
 The specified amount on maturity at any slab shall be paid after one
month from the date of deposit of the final installment.
 Normally no withdrawal shall be allowed before maturity. But, if any
depositor intends to withdraw his/her savings due to certain
unavoidable reasons before years, he/she will be allowed to do so, in the
following manner:
 No benefit or profit shall be allowed for pre-mature encashment within
one year.
 If the account is closed after one year of its opening, profit shall be
allowed on the deposit at prevailing Savings Deposit rate.
 The monthly installment shall be payable by the 8th day (in case of
holiday the next working day) of every month. Advance payment of any
number of installments is acceptable.
 When a depositor fails to deposit any installment, he/she will have to pay
a fine @5% of the overdue amount payable at the time of depositing the
next installment or maximum Tk. 500/-.
 When a depositor fails to pay 3 (three) consecutive installments at any
point before five years term, the customer will cease to remain within the
purview of the scheme and scheme will be treated as a Savings Bank
deposit and profit will be paid on the deposited amount at prevailing SB
account rate subject to completion of 1 (One) year of its opening.
 Loan may be allowed up to 80% of the deposited amount against lien on
the same after at least 2 (Two) years of regular payment of installments
and minimum limit of the loan shall be Tk. 50,000/-
 In case of death of a depositor, the account will cease to be operative and
the amount deposited so far shall be paid to the nominee, and in absence
of nominee, to the legal heirs of the deceased as per rules in force.
 The Bank at its discretion may allow inter branch transfer of the A/C
under the Scheme.
 The clients are encouraged to give standing instructions to the Bank to
deposit the monthly installments, debiting their CD/SB accounts
maintained with the concerned Branch. In that case, no charge will be
realized for such service.
 Normally no statement of the account will be served to the depositor, in
case of need of any depositor, charge @ Tk. 107- per year 7 per statement
shall be realized as cost of paper.

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  At the time of opening account under CSS customer shall refer his/her SB
account number for transferring his/her pension amount or may open SB
A/C at the time of maturity for getting monthly pension amount.

Mudaraba Education Savings Scheme:

(The educational expenses particularly the expenses for higher education are
sharply increasing day by day in our country. Sometimes, the children are
deprived of getting the desired level of education because of the inability of the
parents to meet their educational expenses) But the parents would not feel any
difficulty to defray such expenses if a proper financial planning is made much
ahead of time. Moreover, we are receiving demands from the Islamic minded
people of our country for an attractive Savings Scheme on the basis of Islamic
Shariah so as to encourage them to save in Islamic way for education of their
children. With this end in view, Prime Bank Limited has introduced a Savings
Scheme entitled "Education Savings Scheme" in accordance with the principles
of Islamic Shariah i.e., on the basis of profit and loss sharing. The scheme
provides a unique opportunity to the parents to make a future provision for the
educational expenses of their children when they enter into Schools, Colleges
and Universities out of the benefit of a small amount of savings with the Bank at
an opportune moment.

The salient features of the Scheme are given below:

 The Scheme shall be implemented through all our branches, though it is
specially designed for Islamic Banking branches.

 Deposit of Tk. 50,000/- and multiples thereof but maximum limit of Tk.
5,00,000/-at a time will be acceptable under the Scheme.

 A specially designed Receipt shall be issued for the deposit under the
Scheme in the same manner as issued in case of FDR. Branches shall use
the ESS receipts that used for existing scheme.

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  The instrument shall be issued for a period of 5 years term.

 On maturity a lump sum amount of Tk. 85,382/- shall be payable or

education allowance @ Tk. 1,854/- per month per Tk. 50,000/- shall be
payable on the basis of deposit amount for next 5 years starting from the
completion of the term as per following table. Income Tax @10% on profit
may be deducted at source at the time of payment of lump sum amount.

Initial Deposit (Taka) Lump sum amount Amount of Education

payable at maturity (Taka) allowance per month
(Taka)
50,000/- 85,382/- 1,854/-
1,00,000/- 1,70,763/- 3,705/-
1,50,000/- 2,56,145/- 5,558/-
2,00,000/- 3,41,526/- 7,410/-
2,50,000/- 4,26,909/- 9,263/-
3,00,000/- 4,69,704/- 11,115/-
3,50,000/- 5,47,988/- 12,968/-
4,00,000/- 6,26,272/- 14,820/-
4,50,000/- 7,04,556/- 16,673/-
5,00,000/- 7,82,840/- 18,525/-

 To avail the monthly allowances the depositor is required to surrender

the savings instrument to the Bank duly discharged with a written
instruction to the Bank to pay the installments to his ward on monthly
installment basis as stipulated in the scheme.
 Separate Application form specially designed for the purpose shall be
obtained duly filled in and signed by the depositor.
 Photograph of the Nominee and Ultimate Beneficiary, if any, duly
attested by the depositor, shall be obtained at the time of opening the
account.
 Normally no withdrawal will be allowed before maturity. But if any
depositor intends to withdraw his/her deposit before maturity, the
following rules will be applicable:
 No benefit including profit shall be allowed for pre-mature encashment
within one year.

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  If the accounts/deposits are closed/encashed after one year of its
opening, benefit shall be allowed on the deposit at normal Savings
Deposit rate.
 The instrument will be acceptable as collateral security against any
investment subject to registering lien with the issuing Branch.
 In case of death of the depositor, the amount of instrument will be paid to
the nominee or, in the absence of a nominee, to the legal heirs of the
depositor on production of succession certificate.
 But if the nominee after the demise of the depositor intends to continue
the deposit to enjoy the monthly educational allowance for five years, as
admissible under the rules of the scheme, the receipt should be
surrendered to the Bank on maturity duly discharged by the nominee and
duly authenticated by the legal guardian.
 In case of instrument is lost the procedure for issuance of the duplicate
will be the same as applicable in case of loss of FDR.

Mudaraba Short Term Deposit:

 A short term deposit (STD) account is a running account with amounts
being paid into and drawn out of the account continuously.
 These accounts are called Demand Deposits or Demand Liabilities since
the &, banker is under obligation to pay the money in such deposits on
demand.
 These accounts are generally opened by Business Organization,
Public Institution, and Corporate Bodies.
 An STD account may be opened by an individual person.
 It is a profit bearing deposit. Profit is calculated on daily basis as per
Banks Prescribed Rate and is credited to account on half yearly basis.
 Current profit rate on STD account is presented in the following table:
Particulars Profit Rate
Below Tk. 1 crore 5.00%

Tk. 1 crore and above but below Tk. 10 crore 6.00%

Tk. 10 crore and above 8.15%

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Mudaraba Double Benefit Deposit Scheme:
1. The Scheme shall be implemented through all the branches of Prime Bank
Limited.
2. Deposit of Tk. 25,000/- (Taka twenty five thousand) and multiplies
thereof but maximum limit of Tk. 25,00,000/- (Taka twenty five lac) at a
time will be acceptable under the scheme.
3. A specially designed Receipt shall be issued for the deposit under the
Scheme in the same manner as issued in case of FDR. Branches shall use
the existing SDS receipts for issue of instruments under this scheme till
separate receipts are supplied.
4. The instrument shall be issued for 06 (six) years term.
5. At maturity after 06 (six) years double the amount of deposit will be paid
to the depositor.
6. Photograph of Nominee, duly attested by the depositor, shall be obtained
at the time of opening the account.
7. Normally no withdrawal will be allowed before maturity. But if any
depositor intends to withdraw his deposit before maturity, the following
rules will apply.
8. No benefit including profit/profit shall be allowed for pre-mature
encashment within one year.
9. If the accounts 7 deposits are closed 7 encashed after one year of its
opening, benefit shall be allowed on the deposit at normal Savings
Deposit rate.
10. The instrument will be acceptable as collateral security against any
investment subject to registering lien with the issuing branch.
11. In case of death of a depositor, the amount of instrument will be paid to
the nominee, to the legal heirs of the depositor on production of
succession certificate.
12. In case of instrument is lost the procedure for the issuance of a duplicate
receipt will be the same as applicable in case of loss of FDR.

“On maturity, the terminal value and monthly return of the scheme may
because benefit will be calculated according to profit sharing/weight age."

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Mudaraba Term Deposit Scheme:

This type of deposit should be kept for a fixed term or period. Prime Bank
Limited deals with the following terms deposit.

Sl. No. Particulars Profit Rate

1. 1 (One) month 7.50%
2. 3 (Three) months 11.50%
3. 16 (Six) months 11.50%
4. 1 (One) year and above 12.00%

N.B. For Senior Citizenship Scheme 0.50% higher rate may be offered.

Mudaraba Lakhopati Deposit Scheme:

"On maturity, the terminal value and monthly return of the scheme may
because [benefit will be calculated according to profit sharing/weightage."

1. Monthly Installment size, tenure and terminal value of the scheme will be
as follows:
Monthly Installment Amount to be paid after
Tenure
Size(Taka) maturity (Taka)
250/- 1 5 years 1,00,000/-

500/- 10 years 1,00,000/-

1 ,285/- 5 years 1,00,000/-

2,400/- 3 years 1,00,000/-

2. Profit will be paid at monthly on the basis of weightage sytem to make

the amount Tk. 1,00,000/- (one lac) for any of the above size of deposit.
Any excess or shortfall shall be adjusted at the time of final payment.

3. At present no income tax will be deducted from the Profit earned. But in
future for any change in the government policy Bank reserves the right to
deduct income tax.

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4. The depositor will have the option to choose any installment size and
period at the time of opening of the account and will not be allowed to
change the size of installment afterwards.
5. Account in the name of minors can be opened too under the Scheme as
per standard procedure for minor accounts.
6. A person can open more than one account for any size of installment in
any branch of the Bank.
7. The specified amount on maturity at any slab shall be paid after one
month from the date of deposit of the final installment.
8. The installment shall be payable by the 8th day (in case of holiday the
next working day) of every month. Advance payment of any number of
installments is acceptable.
9. Normally no withdrawal shall be allowed before maturity, if any
depositor intends to withdraw his/her savings due to certain
unavoidable reasons before 3 years, 5 years, 10 years and 15 years, he/she
will not be allowed any benefit if the premature encashment takes place
before completion of 1 year. But the depositor shall be allowed profit
on the prevailing Savings Deposit rate after completion of 1 year from the
date of opening of the account.
10. When a depositor fails to deposit any installment, he/she will have to pay
a fine @5% of the overdue amount payable at the time of depositing the
next installment or Tk. 20/- whichever is higher.
11. If a depositor fails to pay 3 (three) consecutive installments he will have to
pay 5% fine of the overdue installments to regularize the account. If he
fails to pay more than 3 (Three) installments he will cease to remain under
the purview of the scheme and the deposit will be treated as Savings Bank
deposit and profit will be paid on the deposited amount at prevailing SB
A/C rate subject to completion of 1 (one) year of its opening.
12. Loan may be allowed up to 80% of the deposited amount against lien on
the same where the deposited amount shall be at least Tk. 50.000/- and
the profit rate of the loan shall be as per prevailing commercial lending
rate of the Bank.
13. In case of death of a depositor, the account will cease to be operative and
the amount deposited so far shall be paid to the nominee, and in absence
of nominee, to the legal heirs of deceased as per rules in force.

Prepared by :Saima Haider, BBA, Metric No- B061233 22

14. The Bank at its discretion may allow inter branch transfer of the A/C
under the Scheme.
15. The clients are encouraged to give standing instructions to the Bank to
deposit the monthly installments, debiting their CD/SB accounts
maintained with the concerned Branch. In that case, no charge will be
realized for such service.
16. Normally no statement of the account will be served to the depositor, in
case of need of any depositor, charges @ Tk. 10/- per year / per statement
shall be realized as cost of paper. This charge may be changed from time
to time.

Prime Millionaire Mudaraba Deposit Scheme:

1. Monthly Installment size, tenure and terminal value of the scheme will be
as follows:
Monthly Tenure Amount to be paid after Monthly income (After
Installment Size maturity (Taka) Maturity)
(Taka)

Monthly 13786/- up to 10
4,570/- 10 years 10,00,000/-
years

Monthly 171 37/- up to 7

7,890/- 7 years 10,00,000/-
years

Monthly 21 748/- up to
12,465/- 5 years 10,00,000/-
5 years

“On maturity, the terminal value and monthly return of the scheme may
because benefit will be calculated according to profit sharing/weightage."

2. According to the installment size and duration of the deposit, the terminal
will be Tk. 10 lac.

3. Deposit under this scheme is received on Mudaraba principle of Islamic

Shariah. Minimum 70% of investment income of deposited fund is
distributed among the Mudaraba depositors and profit weightage on
deposit will be not less than 1 (one).

Prepared by :Saima Haider, BBA, Metric No- B061233 23

4. At present no income tax will be deducted from the profit earned. But in
future for any change in the government policy Bank reserves the right to
deduct income tax.
5. The depositor will have the option to choose any installment size and
period at the time of opening of the account and will not be allowed to
change the size of installment afterwards.
6. A person can open more than one account for any size of installment in
any branch of the Bank.
7. The specified amount on maturity at any slab shall be paid after one
month from the date of deposit of the final installment.
8. The installment shall be payable by the 8th day (in case of holiday the
next working day) of every month. Advance payment of any number of
installments is acceptable.
9. Normally no withdrawal shall be allowed before maturity, if any
depositor intends to withdraw his/her savings due to certain
unavoidable reasons before maturity, following rules will apply;
a) He/she will not be allowed any benefit if the premature encashment
takes place before completion of 1 year.
b) But the depositor shall be allowed profit on the prevailing Savings
Deposit rate after completion of 1 year from the date of opening of the
account.
10. When a depositor fails to deposit any installment, he/she will have to pay
a fine @ 5% of the overdue amount payable at the time of depositing the
next installment or Tk. 500/- whichever is lower.
11. If a depositor fails to pay 3 (three) consecutive installments at any point of
time before 2 year term, the customer will cease to remain under the
purview of the scheme and the deposit will be treated as Savings Bank
deposit and profit will be paid on the deposited amount at prevailing SB
A/C rate subject to completion of 1 (one) year of its opening.
12. In case of death of a depositor, the account will cease to be operative and
the amount deposited so far shall be paid to the nominee, and in absence
of nominee, to the legal heirs of deceased as per rules in force.
13. The Bank at its discretion may allow inter branch transfer of the A/C
under the Scheme.

Prepared by :Saima Haider, BBA, Metric No- B061233 24

14. The clients are encouraged to give standing instructions to the Bank to
deposit the monthly installments, debiting their CD/SB accounts
maintained with the concerned Branch. In that case, no charge will be
realized for such service.

Mudaraba House Building Deposit Scheme (MHBDS):

1. Monthly Installment size, tenure and terminal value of the scheme will be
as follows:

Monthly Tenure Age Limited (For MHBL Amount to be paid after

Installment facilities only) maturity (Taka)
Size (Taka)
4,570/- 10 years 35 years 10,00,000/-

7,890/- 7 years 38 years 10,00,000/-

12,465/- 5 years 40 years 10,00,000/-

9,135/- 1 0 years 35 years 20,00,000/-

15,770/- 7 years 38 years 20,00,000/-

24,925/- 5 years 40 years 20,00,000/-

“On maturity, the terminal value and monthly return of the scheme may
because mefit will be calculated according to profit sharing/weightage."

2. According to the installment size and duration of the deposit, equity

building amount shall be Tk. 10.00 lac/Tk. 20.00 lac.
3. Deposit under this scheme is received on Mudaraba principle of Islamic
Shariah. Minimum 70% of investment income of deposited fund is
distributed among the Mudaraba depositors and profit weightage on
deposit will be not less than 1 (one).
4. Income tax will be deducted from the profit earned as per government
rules on taxation and the bank reserves the right to deduct Income Tax.
5. The depositor will have the option to choose any installment size and
period at the time of opening of the account and will not be allowed to
change the size of installment afterwards.

Prepared by :Saima Haider, BBA, Metric No- B061233 25

6. Account in the name of minors can also be opened under the scheme
complying all the formalities related with opening account of the minors.
7. A person can open more than one account but Mudaraba House Building
Facility shall be on one account only.
8. The specified amount on maturity at any slab shall be paid after one
monthfrom the date of deposit of the final installment.
9. The installment shall be payable by the 8th day (in case of holiday the
next working day) of every month. Advance payment of any number of
installments is acceptable.
10. Incase of death of principal applicant the account will be allowed to
continue by the co-applicant or legal heir under the scheme if approached
by them and legally acceptable by the bank.
11. Normally ho withdrawal shall be allowed before maturity, if any
depositor intends to withdraw his/her savings due to certain
unavoidable reasons before maturity, following rules will apply;
a) He/she will not be allowed any benefit if the premature
encashment takes place before completion of 1 year.
b) 'But the depositor shall be allowed profit on the prevailing Savings
Deposit rate after completion of 1 year from the date of opening of
the account.
12. When a depositor fails to deposit any installment, he/she will have to pay
a fine @ 5% of the overdue amount payable at the time of depositing the
next installment or Tk. 500/- whichever is lower.
13. MHBL facility will be considered on maturity upon application three
times of the equity but not exceeding Tk. 50.00 lac on compliance of
Investment facilities of the bank.
14. The Bank at its discretion may allow inter branch transfer of the account
under the scheme.
15. The clients are encouraged to give standing instructions to the Bank to
deposit the monthly installments, debiting their CD/SB accounts
maintained with the concerned Branch. In that case, no charge will be
realized for such service.
16. Normally no statement of the account will be served to the depositor, in
case of need of any depositor; bank will provide the same on realization
of charge.

Prepared by :Saima Haider, BBA, Metric No- B061233 26

Remittance Section
To facilitate the need of customers, commercial banks transfer funds from one
place to another through demand draft or Telegraphic transfer. This method of
remitting money from one place to another is known as remittance.
By other way, we can say that—
“Transfer of funds from one place to another place without physical transfer of
money”.

Remittance has following advantage---

1. Convenience
2. Speed
3. Minimum Cost
4. Least risk.

Instruments of Remittance:
The most widely used instruments of inland remittance are:
a) Demand Draft (DD)
b) Pay Order (P.O).
c) Telegraphic Transfer (T.T).

a) Demand Draft:
This is an instrument through which customer’s money is remitted to
another person/firm/organization in outstation (outside the clearing
house area) from a branch of one bank to an outstation branch of the same
bank or to branch of another bank( with prior arrangement between that
bank with the issuing branch).

Issuing Formalities:
1. Filling of DD Application form.
2. Deposit of requisite funds with commission voucher to prepare:
Cash/party’s A/c Dr.
PBL A/c Cr.
Commission Cr.
Vat Cr.
3. Make entry-particulars of DD in DD issuing register.
4. DD advice to the drawee branch should dispatch on the issuing day.
5. Delivery of DD –signature of the applicant to be obtained on the back
page of counter foil of DD.

Prepared by :Saima Haider, BBA, Metric No- B061233 27

6. Telephone to the drawee branch, if the amount above TK 1.00 lac.

b) Pay Order :
This is an instrument issued by the branch of a bank for enabling the
customer/purchaser to pay certain amount of money to the order of a
certainperson/firm/organization/department office within the same
clearing house area of the pay order issuing branch.

Issuing formalities:
1. Fill up Payment order application form. It includes the following things---
2. Realization of the required fund + commission.
Cash/party’s A/c Dr.
PO payee’s A/c Cr.
Commission A/c Cr.
While issuing pay order, PBL gives the following entries ---
Client’s Account Dr.
Pay Order Cr.
Commission Cr.

c) Telegraphic Transfer
This is a mode of transfer of customer’s money from a branch of one bank
to another branch of the same bank or to a branch of another bank (with
prior arrangement between that banks with the TT issuing branch)
through telephonic message adding certain code number or test number.

Issuing formalities:
1. The applicant fills up the relevant parts of the prescribed application from
in triplicate, duly signed the same and gives it to the GB.
2. GB will fill up the commission part for bank’s use and request the
applicant to deposit necessary cash or cheque at the cash booth.
3. GB will prepare telex in appropriate from, sign it and send it to the telex
operator for transmission of the message.
4. GB will prepare necessary advice. Debit advice is sent to the client if
clients account is debited for the amount of T.T.
5. T.T. confirmation advice is sent to the drawee Branch.
6. Credit ticket is used to credit the PBL General account.

Prepared by :Saima Haider, BBA, Metric No- B061233 28

Accounting Treatment:
For telegraphic transfer, PBL gives the following entries:
Client’s Account Dr.
PBL general A/C Cr.
Telex Account Cr.
Commission A/C Cr.
Payment Of T.T.:-
1. After receiving the T.T., verify the test number.
2. Pass the following Vouchers:
PBL General A/C Dr.
T.T. payable A/C Cr.
T.T. payable A/C Dr.
Customer A/C Cr.
3. The details of the T.T. message must be recorded in the T.T. payable register.

Online Branch Banking Section

Prime Line:
To provide Online Branch Banking facility to its valued clients the Bank has set
up a Wide Area Network (WAN) across the country. Under the Scheme, clients
of any branch shall be able to do banking transaction at other branches of the
bank. Facilities available for the clients:
 Cash withdrawal from his/her account at any branch of the Bank
irrespective location.
 Cash deposit in his/her account at any branch of the Bank irrespective of
location.
 Cash deposit in other's account at any branch of the Bank irrespective of
location.
 Transfer of money from his/her account with any branch of the Bank.

Clearing section
In the clearing department the work is to clear the cheques and pay order
through Bangladesh Bank or Central Bank that are submitted for cash collection.
Everyday clearing house takes a place in Bangladesh Bank once in the morning
called morning house (1st house) another in the evening called return house (2 nd

Prepared by :Saima Haider, BBA, Metric No- B061233 29

house) . In the house all the banks representative sit together and change their
money receive instrument of the particular banks to clear the paper and transfer
the money to their particular accounts.

 Types of Clearing:
There are two types of clearing:
1) Inward clearing: The cheques or instruments of PBL that are submitted to
other banks for collections of money or bills are called Inward Clearing.
2) Outward Clearing: The cheques or instruments of other banks that are
submitted to the PBL for collection are called Outward Clearing.

 Clearing House:
Clearing house is a place in the central bank where different banks come to settle
their interrelated liabilities.

Collection Section:
Checks, drafts etc. are drown on bank located outside clearing house are sent for
collection. Motijheel Branch collects its client’s above-mentioned instruments
from other branches of PBL and branches other than PBL. In case of out ward
bills for collection customers account is credited after finishing the collection
processor. And in case of in ward bills customers account is debited for this
purpose.

 Types of Collection:
1. Outward Bills for collection (OBC).
2. Inward Bills for collection (IBC).
1) Outward Bills for collection (OBC):
The cheques and bill are drawn on outstation branches received for
Collection, it is called OBC.
2) Inward Bills for collection (IBC):
The cheques and bills are sent from the outstation of the banks for
collection,
It is called IBC.

Prepared by :Saima Haider, BBA, Metric No- B061233 30

Cash Section
Cash section is a very sensitive organ of the branch and handle with extra care.
Operation of this section begins at the start of the banking hour. Cash officer
begins his/her transaction with taking money from the vault, Known as the
opening cash balance. Vault is kept in a much secured room. The amount of
opening cash balance is entered into a register. After whole days transaction, the
surplus money remain in the cash counter is put back in the vault and known as
the closing balance. Money is received and paid in this section.
Transactions:
1) Cash Receipt:
2) Cash payment

Accounts section
Accounts department is the most important department in the PBL as it supplies
all numerical data and information of the bank. Credit section, Current deposit,
Staff Payments, Total assets and Liabilities various income and expenditure are
shown in the statement prepared by the accounts department.

Functions:
 To record the transaction in the cashbook, general and subsidiary ledger.
 To prepare the statement of daily affairs
 To make the payment of the expense of the branch.
 To record the inter branch fund transfer.
 To check whether all the vouchers are correctly passed.
 To record the voucher in the voucher register.
 To pack and maintain the total debit and total credit vouchers

b) Credit Department
The main business of bank is to settle loans and advances. Bank collects
deposits or saving from one kind of people of society and invests these
deposits as loan, with certain conditions to other kind of people. The
special feature of the investment policy of prime bank is to invest on the
basis of profit and loss sharing system in accordance with the tents and
principles of Islamic Shariah. Its one important objective is to establish
welfare oriental banking system. The bank engaged itself in investment
operation with some attractive schemes. These schemes are household
heavy-duty investment scheme, small business investment scheme and
self employment scheme. Earning profit is not the only motive of the
banks investments policy. Importance is given on blooming social good
and creating employment opportunities also.

Prepared by :Saima Haider, BBA, Metric No- B061233 31

 Modes of investment:
The widely used modes of investment Prime Bank Ltd are:
1. Murabaha
2. Bai-Muazzal
3. Musharaka
4. Mudarabah
5. Hire Purchase
6. Bai-Salam
7. Ijara

Loan schemes:
PBL have formulated the following Loan Schemes
1. General Loan SchemeGeneral Loan Scheme
2. Consumer Credit SchemeConsumer Credit Scheme
3. Lease Finance Lease Finance
4. Hire PurchaseHire Purchase
5. House Building Loan SchemeHouse Building / Apartment Loan Scheme
6. Small and Medium Enterprise(SME)Advance against ShareSmarise (SME)

Consumer Credit Products

1. Household Durable LoanHousehold Durable Loan
2. Doctors LoanDoctors Loan
3. Any Purpose LoanAny Purpose Loan
4. Travel LoanTravel Loan
5. CNG Conversion LoanCNG Conversion Loan
6. Car LoanCar Loan
7. Advance Against Salary Advance Against Salary
8. Education LoanEducation Loan
9. Marriage LoanMarriage Loan
10. Hospitalization LoanHospitalization Loan
11. Credit card

Prepared by :Saima Haider, BBA, Metric No- B061233 32

Interest Rate Charged By Prime bank Ltd

Types of advances Interest Rate Features

Secured Overdraft 11.25%-16% Continuous advance facility given for
(SOD) one year but can be renewed after the
expiry of the time. Given against I.C.B.
unit, FDR and Work Orders.
Loan (General) 12%-16% Given against Personal guarantee,
Hypothecation of goods and land and
building.
House Building Loan 12.75%-16% Given against Personal guarantee, land
(General) and building.
Transport Loan 15% Given against personal guarantee and
hypothecation of vehicles.
Demand Loan 7%-14.5% Given against personal guarantee and
cash collateral securities.
Industrial Credit 12.5%-16% Given against land and building along
with machinery, personal guarantee of
Directors and hypothecation of raw
materials.
Cash Credit 11%-16% The bank sanctions a short-term
(Hypothecation) arrangement by which a customer is
allowed to borrow money up to a
certain limit for a certain time. Given
against Registered mortgage of land
and building, hypothecation f goods
and personal guarantee of Directors.
Past Due Bills 15% Given against Bills Receivables.
Types of advances Interest Rate Features
Loan against Trust 11%-15% Advance allowed for retirement of
Receipt (LTR) shipping documents and release of
goods imported through L/C. The
goods are handed over to the importer
under trust with the arrangement that
sale proceeds should be deposited to
liquidate the advances within a given
period. Given against Bills Receivables,
hypothecation of imported goods, Trust
Receipt, personal guarantee, registered
mortgage of land and building.

Rates of consumer loan

Prepared by :Saima Haider, BBA, Metric No- B061233 33

Consumer Loan Rates

Annual Percentage
Consumer Products Interest Rate Monthly Payment
Rate(APR)

3 Year New Car Fixed* 6.50% 6.601% $ 307.01

4 Year New Car Fixed* 6.75% 6.827% $ 238.72

5 Year New Car Fixed* 7.00% 7.064% $ 198.36

3 Year Used Car Fixed*

7.00% 7.101% $ 309.30
(3 yr. old car or newer)

4 Year Used Car Fixed*

7.25% 7.328% $ 241.05
(3 yr. old car or newer)

3 Year Used Car Fixed*

9.00% 9.103% $ 318.44
(4 to 5 yr. old car)

3 Year Used Car Fixed*

12.00% 12.104% $ 332.73
(6 yr. old car or older)

Unsecured Personal Loan** 18.00% 18.217% $ 181.38

Secured Personal Loan** 15.00% 15.210% $ 173.91

Islamic Banking
Prime Bank Limited started its journey as a bank with a difference by
introducing Islamic Banking from the very beginning along with the
conventional banking. At present the bank has (five) Islamic Banking Branches
under its banking network. 2009 was commendable year for the development of
Islamic Banking Business.
 Investments and deposits grew by 38% and 89% respectably.
 The operating profit of Islamic Banking Business grew by 45% during the
year.

Prepared by :Saima Haider, BBA, Metric No- B061233 34

 The nonperforming investment of Islamic Banking Braches is .19%of their
total investment.
 Total import and export business generated by the Islamic Branches
showed remarkable growth. Total import and export businesses handled
was Tk. 6,464 million and Tk. 4,677 million respectably.
 The Shariah Council of PBL consists of 10 members.

Final rate of
Deposit type Weightage
profit2009 (%)
Mudaraba savings deposit 0.075 6.15
Mudaraba short term deposit 0.52 5.00-8.15
Mudaraba term deposit
36 months 1.00 10.50-12.50
24 months 0.98 10.50-12.50
12 months 0.96 10.50-12.50
06 months 0.92 10.50-12.25
03 months 0.88 10.50-12.25
01 months 0.84 8.00-10.50
Mudaraba contributory savings scheme 1.05 9.00-9.50
Mudaraba monthly profit deposits 1.02 9.00-10.67
scheme
Mudaraba education savings scheme 1.20 10.75
Mudaraba Hajj savings scheme 1.20 10.75
Special deposit scheme 1.02 9.00-10.25
Millioneer deposit scheme 1.05 11.00
Lakhpoti deposit scheme 1.05 9.00-10.00

Prepared by :Saima Haider, BBA, Metric No- B061233 35

 CHAPTER THREE
Retail Banking of
Prime Bank Ltd.

Prepared by :Saima Haider, BBA, Metric No- B061233 36

Context
Retail lending (consumer financing) is one of the core businesses for Prime Bank
Limited and concerned with significant future growth. This reflects the strength
of retail lending to produce revenue. It has strong opportunities for cross selling
and capitalizing. Middle class and higher income level people are main target
here.

The key features in retail lending are:

1 It is volume intensive.
2 It is technology driven.
3 It is service elastic.
4 It offers greater visibility to the Bank.

Asset quality is expected to be better in retail lending than corporate lending due
to a combination of various factors including:
1 Distribution of risk.
2 Product Structuring based on customer life cycles.
3 Strong collection mechanisms.
4 Credit scoring models (specially behavioral models) teach better track of
customer behavior.

Prime Bank has so far taken a conservative approach in retail credit as part of its
plans for growth in loan assets in keeping with its corporate objectives.
However, conservatism does not simply mean minimizing bad debts, but
incorporates the concept of lending against acceptable risks. The Bank’s
overriding goal is not only to increase shareholder returns but also to contribute
to improving the quality of life of the limited income segments of the country. In
pursuit of its objectives to combine socio-economic responsibilities with a
sustainable profit-making business, retail lending needs to have the following
critical success factors:

1 Well designed products with appropriately focused marketing efforts.

2 Sufficient planning through use of statistical techniques and decision support
systems.
3 Proper control of approval process.
4 Structured MIS.

Prepared by :Saima Haider, BBA, Metric No- B061233 37

Taking the previous into account, this policy (to be referred as Retail Banking
Credit Policy) sets out the general policy parameters for lending to the retail
segment. Retail lending in the context of this policy refers to lending to
individuals in their own right and excludes sole proprietors and small
businesses.

New Product Approval Procedure:

A product is defined as any form of packaged lending or service offering which
is designed to meet the requirement of a particular market segment without
being adapted to individual needs.

This section articulates fundamental policy guidelines for Consumer Financing.

Before launching, for every type of retail lending product, bank shall develop
fully documented product program guidelines. These guidelines shall include
objective / quantitative parameters for the eligibility of the borrowers and
determining the maximum permissible limit per borrower.

These fundamental guidelines will be the key elements that would support the
bank’s retail credit culture and they will state bank’s behavior when dealing
with customers and managing lending portfolio of such loans. Any deviation
from these guidelines will require approval from the competent authority.

While developing Product Program Guidelines (PPG) for any product - the
following guidelines must be included in the PPG documents to ensure that the
PPG is covering all the aspects of risk and return for the particular product.

 PPG Guideline No. 1: Customer Segment

 PPG Guideline No. 2: Purpose
 PPG Guideline No. 3: Nationality
 PPG Guideline No. 4: Age Limit - Minimum age (years) / Maximum age
(years)
 PPG Guideline No. 5: Minimum Income
 PPG Guideline No. 6: Loan Size
 PPG Guideline No. 7: Loan to Price Ratio
 PPG Guideline No. 8: Security/ Collateral
 PPG Guideline No. 9: Legal Documents
 PPG Guideline No. 10: Interest Rate

Prepared by :Saima Haider, BBA, Metric No- B061233 38

 PPG Guideline No. 11: Maximum Term of Loan
 PPG Guideline No. 12: Repayment Method
 PPG Guideline No. 13: Disbursement Mode
 PPG Guideline No. 14: Disbursement pre-condition
 PPG Guideline No. 15: Debt Burden Ratio (DBR %)
 PPG Guideline No. 16: Verification of Personal Details and Quotation
 PPG Guideline No. 17: Substantiation of Income

A basic Product Program Guideline (PPG) has been developed for eleven retail-
lending products. The current products are:
1 Car Loan
2 Doctors’ Loan
3 Household Durable Loan (Consumer Durable Loan)
4 Marriage Loan
5 Any Purpose Loan (Personal Loan)
6 Education Loan
7 Hospitalization Loan (Medical Loan)
8 Swapna Neer (Housing Loan)
9 Advance Against Salary
10 Travel Loan
11 CNG Conversion Loan

Credit Principles:
The credit policy is statement of basic principles that governs the extension of
credit. It provides a framework in which to conduct business and also enables
Prime Bank Ltd to have a long term business plan. Following credit principles
are mentioned below.

1 Assess the customer’s character for integrity and willingness to repay.

2 Only lend when the customer has capacity and ability to repay.
3 Only extend credit if bank can sufficiently understand and manage the risk.
4 Use common sense and past experience with thorough evaluation and credit
analysis.
5 Should not base decisions solely on customer’s reputation, accepted practice,
other lender’s risk assessment or the recommendations of other officers.
6 Be practical in identifying, managing and communicating credit risk.
7 Be industrious in ensuring that credit activities fulfill the requirement set out
in Product Program Guidelines.

Prepared by :Saima Haider, BBA, Metric No- B061233 39

Retail Credit Assessment & Approvals

Introduction
This section provides high level guidelines for the delivery of an effective and
reliable method for the assessment and approval of retail credit. The primary
factor determines the quality of the Bank’s credit range. It also determines
repayment of loan installment & time.

The authorized Credit Officers/ Executives must accurately determine this prior
to approval. Therefore a thorough credit risk assessment shall be conducted to
approve any credit facilities. While assessing a retail credit proposal more
importance shall be given on repayment capacity.

Each credit assessment must:

1. Be based on the sound ethical practices, which are consistent with all banking
rules and laws.
2. Be consistent, at a product level, with Product Program Guideline.

Applications:
The first stage of credit assessment and approval process is a Retail Credit
application. The application must provide sufficient information to enable the
Bank to assess the credit. The application must call for sufficient information to
verify the past history of the individual and to facilitate the collection efforts.

The information in the application must also establish “Know Your Customer”
(KYC) type. Specific information should include:

1 Telephone and address contact details.

2 Employment/business details.
3 Income details.
4 Income & Expenditure Statement.
5 Personal Net worth Statement.
6 Residence details.
7 Credit references and guarantors details.
Contact Point Verification:
Verification of the socio-economic status of the applicant is a key part of
application process. The level and verification details must be documented.
Contact Point Verification (CPV) shall be done for all applicants except for the

Prepared by :Saima Haider, BBA, Metric No- B061233 40

High Net Worth individuals (any individual having documented annual income
greater than equal to BDT 1,000,000 or customers having an existing account
relationship with the bank or senior executives having long standing corporate
relationships with the bank). The objective is to confirm the declared information
in the application form. CPV includes verifying the following:

i) Applicant’s Residence,
ii) Business/Office address
iii) Telephone, status in details.
iv) Bank Statement
v) Guarantor’s Information Verification
vi) Other Income Documents

Contact Point Verification through Third party(s):

As the verification is a critical function of loan application process, it is to be
managed professionally by independent third party agency(s). This will enable
the selection of better accounts for accelerated processing and quick rejection of
those having negative or insufficient information.

Due carefulness of such third parties is also a very important part of practical
risk management. Frequent checks and visits to the offices/workplaces of third
parties need to be done. This will also include random telephone or personal
visits by Bank officers for the accounts. The percentage of accounts for which the
data will be verified will be determined by the risk dynamics of a product but
must not be less than 20% in any case.

Quarterly review meeting with third party agents must be held to

1 Assess the performance of the agents.
2 Discuss risk related issues
3 Discuss cooperative activities.

Prepared by :Saima Haider, BBA, Metric No- B061233 41

Guarantee:
One of the fundamental needs for securing retail lending is to obtain guarantee
acceptable to the bank by way of social status and perceived creditworthiness.
The following must be checked while guarantee for securing the loans are
obtained:

1. No loans shall be allowed against the guarantee of an existing guarantor of

any other loan of the Bank or any other Banks.
2. Existing borrowers of the bank shall not be eligible to become Guarantors
or any retail loans.
3. No guarantee shall be obtained from the Chairman, Managing Director and
Directors of Corporate facility clients. However, under exceptional cases,
obtaining such guarantee must be referred to the Head Office for
approval.
4. All guarantors must be cross-referenced through available procedure to
determine whether the guarantor is an existing bank customer, or if the
guarantor had any past relationship with the bank. If the guarantor does
not have acceptable financial standing based on previous credit history
and/or uncertain social status, the guarantee should be rejected or
referred to the appropriate level of authority.

Duplication check
All approved applications must be checked against Banks database to identify
whether the applicant is enjoying any other loan in other account apart from the
declared loans. It must also be checked that the applicant has credit facilities
with another bank and any payment default is made. This cross- checking is
mandatory for Retail Credit approval. In such cases, if the applicant has a history
of payment default, the application must be considered more carefully.

Maintenance of Negative Files

A negative file is to be maintained to ensure that individuals with a history of
default and doubtful integrity do not get any loan from the Bank. This negative
file is to be maintained centrally by the Retail Credit Risk Management unit.

Assessment Methods:
Retail credit is often considered as a set of cyclic events. Every credit facility
carries a certain level of credit risk. There are a number of changes during the
life cycle of a customer which could have impact on his repayment capability
and lead to deviations from the credit facility agreement. Sometimes borrowers
lose their jobs, get affected by business downturn, spend more than they earn, or

Prepared by :Saima Haider, BBA, Metric No- B061233 42

borrow more than what they can repay. Before the approval of any type of retail
limit, the Credit Risk Unit (credit analyst team) in the Retail Credit department
must assess the credit risk properly.

This section outlines the process that will be used to assess credit requests. It is
the policy of the Bank to use a method of assessment that provides for the
highest level of control and risk for a particular group of customers.

There are two major assessment methods will be used for retail credit:
i) Credit Scoring
ii) Judgmental Method

Credit Scoring:
Credit scoring is a method used for predicting the creditworthiness of the
applicant. Key items of application information such as occupation, residence
status, income details etc are assigned point-based values. The total of these
point-based values i.e. the final score, is a pointer to the probability of default. .

Judgmental Decisions:
Judgmental approval involves the assessment of an applicant’s character,
capacity to repay and guarantee, which are defined as:
1 Character- an applicant’s willingness to meet past commitment.
2 Capacity- an applicant’s willingness to meet current and future commitment.

Credit Approval Process:

Applications are received at Credit Assessment & Approval unit from sales team
/ branches. Applications are evaluated / assessed by Credit Analysts /
Managers. The evaluation process is carried out as per the product program
guideline (PPG). A detailed credit and risk assessment should be conducted fast
to approve any loan. Sales Team/Branches must complete a documentation
checklist to ensure all documents have been properly obtained.

The sales team / branch staff responsible for loan sales as well as the customer
relationship, and must be held responsible to ensure the accuracy of the loan
application submitted for approval.

The credit approval function will be separated from the marketing / sales
function. Approvals must be evidenced in writing. Approval records must be
kept in file with Retail Credit Applications.

Prepared by :Saima Haider, BBA, Metric No- B061233 43

Delegation of Approval Authority (Underwriting Authority):
A structured Credit approval authority is required for ensuring smooth and
transparent credit operation in the Bank. The following is the structure
applicable to retail credit approvals:
1. The Board of Directors
2. The Executive Committee of the Board
3. The Managing Director
4. The Deputy Managing Director
5. Retail Credit Committee.

Process of delegating approval authority:

All credit approval powers shall be exercised as per the giving out by the Board
of Directors. The Board of Directors will also review and approve all requests for
improvement and revisions. Specific credit approval limits will be passed on by
the Board of Directors and the Managing Director.

Criteria for selection of Executives to be given Credit Approval Authority:

It is essential that executives enjoying credit approval authority have relevant
training and experience to carry out their responsibilities effectively. As a
minimum, credit approving executives should have the following
characteristics:
1 At least 5 years experience working in corporate/commercial banking as a
relationship manager or account executive.
2 Training and experience in financial statement, cash flow and credit risk
analysis.
3 A working knowledge of principles of Accounting
4 A good grasp over the local industry/market dynamics.

Credit Approval Authority:

Credit approval authority may be delegated by the Board of Directors to the
following body/Executive:
1. The Executive Committee of the Board
2. Different levels of Executives in the Bank

The Board of Directors:

The Board of Directors will have the authority to sanction any loan for the
amount not exceeding the regulatory limit that the Bank can provide to a single
customer. Besides, all proposals for waiver of interest, commission, charges etc

Prepared by :Saima Haider, BBA, Metric No- B061233 44

and principal must be approved by the Board of Directors. Any proposal for
reduction of interest rate(more than 1%) of must be approved by the Board.

The Executive Committee of the Board:

The Executive Committee of the Board of Directors may sanction any loan for
the amount not exceeding the regulatory limit the Bank can provide to a single
customer. However, it will not have the authority to approve any proposal for
waiver of interest, commission; charges etc. Any proposal for reduction of rate of
interest less than 1% percent or equal) may be approved by the Executive
Committee of the Board. Any proposal will be placed to the Executive
Committee of the Board for approval before passing it to managing director.

The Management:
In the Management, the following executives may be delegated credit approval
authority:
1. The Managing Director
2. The Deputy Managing Director supervising Retail Banking
3. Executives working at Retail Banking, Head Office
4. Executives working as Head of Branches

Prepared by :Saima Haider, BBA, Metric No- B061233 45

 CHAPTER FOUR
Financial Performance of PBL

Prepared by :Saima Haider, BBA, Metric No- B061233 46

Performance at a glance

Taka in Million
Year
2007 2008 2009
Authorized Capital 1000 40000 4000
Paid up Capital 1000 1400 1750
Reserve Fund 815.89 1005.98
Equity Fund 2239.80 2808 3860
Deposits 28069.24 36022.46 54724
Advances & Loans 23219.67 31916.11 45010

Investment 3083.81 3939.50 7844.34

Foreign Exchange business
Import 36747.00 40303.00 52639
Export 19501.80 28882.00 41401
Guarantee Business 4085.15 5302.80 5386

Operating Income 1970.37 2406.43 3232

Operating Expenditure 824.23 886.09 1101

Operating Profit 1146.14 1520.34 2131

Profit After Tax 611.94 568.20 1051.89

Total Assets 41506.29 32361.62 60899.44

Fixed Assets 321.68 372.12 412.10

Dividend: Cash - - -
Bonus 40% 25% 30%(proposed)
Book Value Per Share 223.98 200.57 220.57

Earning per Share 43.71 40.59 60.11

Market Value per Share 879.50 681.50 528.75

Number of Employee 894 1024 1172

Number Of Branches 36 41 50

Number of Share Holders 2620 4467 5262

Number of Foreign Correspondents 501 517 528

Prepared by :Saima Haider, BBA, Metric No- B061233 47

Capital Adequacy Ratio 10.74% 9.83% 9.95%

Amount of classified Loan 246.23 308.21 367.15

Return on Investment 6.36% 6.59% 7.12%

Return on Assets 2.16% 1.54% 2.05%

Income from Investment 196.15 259.52 419.50

4.2 Liquidity Statement (analysis of assets & liabilities) as at

December, 2009
Assets statement
1-12
up to above
particulars months 1-5 years total
1 month 5 years

Cash in hand 3,350,640,854 - - - 3,350,640,854

Balance with
other banks
252,892,063 - - - 252,892,063
& financial
institutions
Money at call
& short 1,180,000,000 - - -
1,180,000,000
notice
Investments 39,449,059 255,000,000 3,150,046,000 95,000,000 3,593,495,059

Loans 1,992,098,00
6,147,979,548 8,579,326,000 8,555,428,060 25,274,831,600
advances 0

Fixed assets 2,513,441 22,620,965 186,059,158 155,897,873 367,091,436

Other assets 125,555,660 133,935,000 48,644,925 - 308,135,585
Non banking
- - - - -
assets
2,242,995,87
Total assets 11,099,030,624 8,990,881,965 11,940,178,143 34,327,086,600
3

Prepared by :Saima Haider, BBA, Metric No- B061233 48

Liability statement
1-12
up to above
particulars months 1-5 years total
1 month 5 years

Borrowings from
Bangladesh
bank, other
845,369,978 100,000,000 - - 945,369,978
banks, financial
institutions &
agents

Deposits 9,463,567,046 8,450,629,000 5,878,352,000 4,190,745,000 27,983,293,046

Other accounts 668,494,035 - - - 668,494,035

Provision &
51,894,300 244,292,088 1,336,631,719 - 1,632,773,107
other liabilities

Total liabilities 11,029,280,359 8,794,921,088 7,214,983,719 4,190,745,000 31,499,930,166

Achievement against Business Plan:

Actual Achievement
Particulars Budget 2006
Dec.2006 Dec.2006
Deposit 45,000 54,724 122%
Advance 40,000 45,010 113%
Operating profit 2,100 2,323 111%
Import 50,000 52,639 105%
Export 40,000 41,801 105%
Inward remittance 7000 15,050 215%
Bank guarantee 7000 5,536 775%
Inland L/C 7000 10,174 145%

Prepared by :Saima Haider, BBA, Metric No- B061233 49

Graphical Presentations at Dec. 2009
BANK’S DEPOSIT MIX

3.4.2 Credit Portfolio

Prepared by :Saima Haider, BBA, Metric No- B061233 50

Growth in Deposit

Year
Particulars
2007 2008 2009
Deposit 28069.24 36022.61 54727.11

Growth in Loans & Advances

Year
Particulars
2007 2008 2009
Loans & 23219.67 31916.11 45010.55
Advances

Prepared by :Saima Haider, BBA, Metric No- B061233 51

Growth in Investment

Year
Particulars
2007 2008 2009
Investment 3083.81 3939.50 7844.34

4.4.6 Growth in Profit

Year
Particulars
2007 2008 2009
Profit before tax 1146 1520 2131

Prepared by :Saima Haider, BBA, Metric No- B061233 52

Foreign Exchange Business

Year
Particulars
2007 2008 2009
Profit before tax 1146 1520 2131

Performance of PBL ,O.R.Nzam Road Branch Ctg

Deposit Mix

Prepared by :Saima Haider, BBA, Metric No- B061233 53

Growth in Deposit
Year
Particulars
2007 2008 2009
Deposit 123.2 299.9 547.9

Growth in Advance
Year
Particulars
2007 2008 2009
Advance 234.23 536.1 847.2

Prepared by :Saima Haider, BBA, Metric No- B061233 54

 SWOT ANALYSIS
The comparison of strengths, weaknesses, opportunities & threats is normally
referred to as a SWOT analysis. From SWOT Analysis we can figure out the
ongoing scenario of the PBL. That is by doing the SWOT Analysis; it is possible
to find out the strength, weakness, opportunities, and threats of PBL.

Internal factors:
Strengths:
# The bank has been graded as a top class bank in the country through
internationally ccepted CAMEL rating.
# PBL has well reputation in the market
# PBL has an efficient management.
# Expanded product line
# Good banker-customer relationship
# Proper credit risk management;
# Lake of classified loan.
# This bank has introduced on-line banking.
# PBL is not engaged in unfair business.
# PBL has many attractive deposit schemes.
# Well furnished and fully air-conditioned.
# Master and Visa card was provided first.
# Workers are swift at their activity.
# There are sound operation of general activity.

Weakness
# Not following credit policy manual properly at the time of loan
disbursement.
# Performance in non funded business is insufficient.
# Long term investment is not sufficient.
# Poor practice of Islamic banking.
# Contribution of retail loan is also very low which is only 2.89% of the total
loans.
# Shortage of manpower
# Not yet expanded its network in rural areas.
# The Branch depended on Head Office funding.

Prepared by :Saima Haider, BBA, Metric No- B061233 55

External Factors

Opportunities:
# Branches are increasing day by day as people are interested to do
business with PBL.
# Islamic values are observed in the banking system.
# Relationship between bankers and customers are very nice.
# To facilitate credit risk management process the bank can put in place its
Standard Operating Procedure (SOP) as per International best practices
prepared by Pricewaterhouse Corporation.
# Islamic banks becoming more reliable day by day.
# It can expand its network in rural areas.
# PBL can enter into various exchange houses western union for inward
remittance.
# Govt. has taken step against illegal remittance.
# Growth of business and economic development

Threats:
# More Islamic banks are coming ahead. So other banks are threat for PBL.
# Govt. regulation on Islamic banking create problem.
# There are too much competitors in the market.
# Strong sales department of other banks.
# Different classic services of foreign banks.
# Entrance of new private commercial bank.
# Govt. pressure to reduce interest rate.
# Overall liquidity crisis in money market.
# High salary scale offered by other private commercial bank.

Prepared by :Saima Haider, BBA, Metric No- B061233 56

 CHAPTER FIVE

 PROBLEMS
 RECOMMENDATION
 CONCLUSION

Prepared by :Saima Haider, BBA, Metric No- B061233 57

Prepared by :Saima Haider, BBA, Metric No- B061233 58
Problems:

I have observed some problems during my internship at PBL, O.R. Nizam Road
Branch, Chittagong, they are as follows:
1. The branch dependent on Head Office for any kind of retail loan.
2. Problems facing to recover loan amount at due time and sometimes
customer avoid the recovery officers by different duplicity.
3. Lack of practices of Islamic culture and ethics properly.
4. Clients are unfamiliar with Islamic Banking process of loan payment.
5. Clients dishonesty in giving quotation of the product which occur tax and
duty charge involvement risk.
6. Efficiency has been reduced due to the shortage of employees.
7. Bank having a large amount of idle deposited money.
8. Contribution of retail loan is also very low which is only 2.89 % the total
loan.
9. Lack of practice in all types of retail credit.
10. Advertising, in the form of electronic media is not strong.

Prepared by :Saima Haider, BBA, Metric No- B061233 59

Recommendations

At the time of working at Prime Bank Limited, O.R. Nizam Road Branch, I
observed several positive activities in the banking field including management
pattern, banking operation and performance. As today’s banking sector is highly
competitive, so it has to improve and change its operational process for better
business. For the improvement following measures might be taken:

1. Bank should be more innovative and diversified in its services.

2. Sanction loan limit with proper quotation judgment.
3. As the number of banks in Bangladesh is too high considering the size of
the country so PBL should try to keep strong customer relationship with
existing customer.
4. Coordinated efforts are required for increasing lending activities in the
field of corporate and retail.
5. Personal selling plays vital role to attract new customers and satisfied
customers brings new customer for the branch. So, Social Islamic Bank
should focus on personal selling and pursue existing customers to bring
new accounts for them.
6. Set individual target for all employees of branch and ensure its
implementation.
7. Focus on Islamic Banking credit policy through proper exposure of credit
products.
8. Increase the number of human resources in customer service & clearing
section to give service to huge number of customers.
9. Proper practice in all types of retail loan provided by the bank.
10. To reduce different credit risk and manage credit, follow SOP prepared
by Pricewaterhouse which strengthened internal control system and
facilitates risk management process.
11. Need to improve advertising procedure.

Prepared by :Saima Haider, BBA, Metric No- B061233 60

Conclusion
Now-a-days Bangladesh economy largely depends on service sector. In
Bangladesh Banking is a prominent service sector growing very fast. After the
Second World War as a financial product lending had been fully structured and
institutionalized in USA and other developed countries. Now banking sector
play an important role in modern society and private commercial bank has
became more competitive, diversified and dynamic compared to traditional
banking system. In banking sector PBL is a name of trust, to improve the life
style of the people, to develop the business environment. PBL performs as a
bank of difference. Day by day its area of service is increasing all over the
country through setting up new branch at new place.

Prime Bank’s strategy is to focus on marketing the bank’s products to wider

range of customers and provide different loan to different manufacturer, traders,
service provider, and salaried person. For three months it is clear that without
bank involvement economic development can not be possible.

Risk is an associated factor with financial service industry. A critical success

factor for sustained profitability and continuous delivery of services is how
effectively the risk is managed.

During the period of my internship program wanted to gather practical

knowledge and this report mainly focus on the General Banking of the bank
because credit section is the main sources of earnings of bank. Though I tried my
best level to make the report more informative, this report contains much error,
there may be some printing mistakes no doubt for this reason I apologize.

Prepared by :Saima Haider, BBA, Metric No- B061233 61

Bibliography
Annual report of the prime Bank Ltd
PBL Prospectus.
Policy Guide lines Price water house Pvt. Ltd.
Previous report
Bank Fund Management -Peter S. Rose
Banking Theory And Practice - K C Sheker
General Banking Manual
Various journals, booklets, vouchers published by PBL
Bangladesh Bank Manual.
Corporate Banking Manual
www.prime-bank.com

Prepared by :Saima Haider, BBA, Metric No- B061233 62