Chapter 03General Banking Service of NBL

13

General Banking is the starting point of the entire bank operation. General Banking service department aids in taking deposits and simultaneously provides some ancillaries services. It provides those customers who come frequently and those customers who come one time for enjoying ancillary services. In some general banking activities, there is no relation between the banker and the customers who are who will take only one service form bank. On the other hand, there are some customers with whom bank are doing its business frequently. It is the department, which provides day-to-day services to the customers. Everyday it receives deposits from the customers and meets their demand for cash by honoring cheques. It opens new accounts, demit funds, issue bank drafts and pay orders etc. since bank in confined to provide the service everyday general banking is also known as retail banking.General banking department is the heart of all banking activities .All other departments are linked with this department. It also plays a vital role in deposit mobilization of the branch. National Bank Limited provides different types of accounts, locker facilities, special types of saving scheme and flexibilities of remittance under general banking.This department performs the general function of banking In National Bank Ltd. For performing the operation of this department a good number of people are allotted. The general banking department of National Bank (Gazipur Branch) consists of the following section:→Dispatch section→Accounts opening section→Cash Management section→Remittance section→Deposit section→Clearing section→Credit Card section→Loans & Advances Section→Western Union Money Transfer section→Accounts section                    

3.1.: DISPATCH SECTIONDispatch division operates the function of dispatching the intimation letter to the client, IBCA, IBDA, and OBC to the other banks for internal transaction with bank. The officer engaged in the dispatch division maintains two types of register books to entries for record of these documents particulars.These two types of register books are:→Inward mail registers.→Outward mail registers.

3.2. ACCOUNTS OPENING SECTION:Account opening is the gateway for clients to enter into business with bank. It is the foundation of banker-customer relationship. This is one of the most important sections of a branch, because by opening accounts bank mobilizes funds for investment. Various rules and regulations are maintained and various documents are taken while opening an account. A customer can open different types of accounts through this department. Account opening procedure:Step 1: The account should be properly introduced by any one of the following:→An existing current account holder of the bank. →Officials of the Bank not below the rank of an assistant officer.

14

→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 to be opened. The form is filled up by the applicant himself / herself.Step 3: →Two copies of passport size photographs from individual are taken; in case of firms photographs of all partners are taken. Applicants must submit required documents. →Application must sign specimen signature sheet and give mandate. Introducer’s signature and accounts number – verified by legal officer.Step 4:→Authorized Officer accepts the application.Step 5:→Minimum balance is deposited – only cash is accepted.Step 6: →Account is opened and a Cheque book and pay-in-slip book is given.

Documents required for opening account:Individual /Joint Account:→Introduction of the account.→Tow photographs of the signatories duly attested by the introducer.→Identity (copy of passport/NID/Driving Licenses).→Joint Declaration Form (For joint a/c only).→Employee’s Certificate (in case of service holder).

Partnership Account:                                                →Introduction of the account.→Two photographs of the signatories duly attested by the introducer.→Valid copy of Trade License.→Rubber stamp.→TIN number certificate.→Identity (Copy of passport).→Permission letter from DC/Magistrate (in case of newspaper)

Limited Company:→Introduction of the account.→Two photographs of the signatories duly attested by the introducer.→Valid copy of Trade License.→Board resolution of opening A/C duly certified by the Chairman/Managing Director.→Certificate of Incorporation.→Certificate of Commencement (In case of Public limited company).→Certified (joint stock) true copy of the Memorandum and Article of Association of the →Company duly attested by Chairman or Managing Director.→List of directors along with designation & specimen signature.→Latest certified copy of Form – xii (to be certified by register of joint stock companies) (In case of Directorship change).→Rubber Stamp (Seal with designation of each person)→Certificate of registration (In case of Insurance Company – Obtained from department of Insurance form the Peoples Republic of BD.)

15

Club / societies account:   →Introduction of the account.→Two photographs for Opening A/C duly certified by President/Secretary.→Board Resolution for Opening A/C duly certified by President/Secretary.→List of Existing Managing Committee.→Registration (if any).→Rubber Stamp.→Permission letter from Bureau of N.G.O. (In case of N.G.O. A/C)

3.3. CASH MANAGEMENT SECTION:Cash management section of any bank plays vital role in general banking department because it deals with the most liquid assets. The proper management of this section entails overall effectiveness of any bank. NBL has a very equipped cash section.This section is responsible for the following function:→Receipt of deposit.→Making payment to the customers.→Management of vault of the branch.

3.3.1. Receipt of depositThis section receives deposit or funds from the customer and the collection procedure as follows:→At first the amount is counted and if ok then verified the purity of the note paid if there is any confusion of the teller.→If the cash notes are satisfactorily sound then the teller marked in color the amount in word over the deposit slip.→At last the receiving officer/ teller signed the deposit slip and by the sign of the authorized officer the deposit of fund finished in favor of a customer.→In case of received of clearing cheque, the cheque is scrutinized at first whether the cheque is authenticated as per the NI Act. If satisfied then a crossing is marked so that this cheque never been enchased over the cash counter→Then the amount is kept apparently deposited in the customers account and the cheque proceeds to the clearinghouse accordingly.

3.3.2. Making payment to the customerThe payment is made to the customer only against a valued authentic cheque. The teller has to follow the following steps in making such payment:→Receiving the cheque from the customer.→Examining the cheque. In case of examining the cheque, the teller is predated then the date is to be sure about the following questions:→Date of cheque today’s or not; if it is predated then the date is with in 6 months from today;→Amount is written in word and in figure and both is valued same;→Signature is installed and it is as it is the signature kept in the bank;→There is sufficient amount in the customer’s accounts for making payment.→If the teller is satisfied regarding the above questions, then he/she debits the respective party a/c for making payment.→If it is a bearer cheque (a cheque where the bearer’s name is installed instead of “Self”/“cash”) the signature is also taken for the record.→Finally the “cash paid” seal is marked over the cheque leaf for the collection of the cheque after making the payment to the customers.

16

3.4. Remittance Section:Remittance means transferring of fund through different instruments other than cheque.Remittance includes both inland and foreign remittance. In this section, only the local remittance is described.There are two types of remittance:→Inward remittance.→Outward remittance.

3.4.1. Inward remittanceIt consists of the following:→Pay Order payable.→Demand Draft payable.→Telegraphic Transfer payable.

3.4.2. Outward remittanceThe outward remittance includes the following:Pay Order issue:→Demand Draft issue.→Telegraphic Transfer issue.

Procedures & Accounting treatment of outward remittance:Specific procedure and accounting journals are made for the transfer and the settlement of the outward remittance.

Procedures and journals for pay order (PO):→Filling of PO application form→Receive Cash/ OK transfer Chaque, from the client →Preparation of PO & signed by two officers bearing power of attorney No (PA No) →Handover the PO to the client along with the copy of application form

Procedures and journals for TT/DD:→Filling of TT/DD application form,→Receive Cash/ OK transfer Chaque From the client→Preparation of DD & signed by two officers Bearing power of attorney No (PA No)→Handover the DD to the client along With the copy of application form.

3.5. Deposit SectionDeposit is the lifeblood of a bank. From the history and origin of the banking system, deposit collection is the main function of a bank.

3.5.1. Accepting deposits:The deposits that are accepted by NBL like other banks may be classified into two types.These are:a) Demand Depositsb) Time Deposits

a) Demand deposits:These deposits are withdrawn able without notice, e.g. current deposits. National Bank Limited accepts demand deposits through the opening of, -

17

→Current account→Savings account→Call deposits from the fellow bankers

b) Time deposits:A deposit which is payable at a fixed date or after a period of notice is a time deposit.National Bank Limited accepts time deposits through Fixed Deposit Receipt (FDR), Short Term Deposit (STD) and Bewared Certificate Deposit (BCD) etc. While accepting these deposits, a contract is done between the bank and the customer. When the banker opens an account in the name of a customer, a contract arises between them. This contract will be valid one only when both the parties are competent to enter into contract.As account opening initiates the fundamental relationship & since the banker has to deal with different kinds of persons with different legal status, National Bank Limited officials remain very much careful about the competency of the customers.

3.6. Clearing Section:Cheques, Pay Order (P.O), Demand Draft (D.D.) Collection of amount of other banks on behalf of its customer are a basic function of a Clearing Department.

3.6.1. Clearing:Clearing is a system by which a bank can collect customers fund from one bank to another through clearing house.

3.6.2. Clearing House:Clearing House is a place where the representatives of different banks get together to receive and deliver cheque with another banks.3.6.3. Member of clearing House:National Bank Ltd. is a scheduled Bank. According to the Article 37(2) of Bangladesh Bank Order, 1972, the banks, which are the member of the clearinghouse, are called as Scheduled Banks. The scheduled banks clear the cheque drawn upon one another through the clearinghouse.

3.6.4. Types of Clearing:There are two types of clearing-A. Outward clearing.B. Inward clearing.

(A) Outward Clearing:When the branches of a bank receive cheque form its customers drawn on the other banks within the local clearing zone for collection through Clearing House, it is Outward Clearing.

(B) Inward Clearing:When the branches of a bank receive cheque drawn on them from other banks in the Clearing House, it is Inward Clearing.

3.6.5. Types of clearing house:                            There are two type of clearing house.These are:A) Normal clearing houseB) Same day clearing house

18

(A) Normal clearing house:1) 1st house: 1st house normally stands at 10 am to 11 am2) 2nd house: 2nd house normally stands after 3 p.m. and it is known as return house.

(B) Same day clearing house:1) 1st house: 1st house normally stands at 11 a.m. to 12 p.m2) 2nd house: 2nd house normally after 2 p.m. and it is known as return house.

3.6.6. Who will deposit cheque for Clearing?Only the regular customers i.e. who have Savings, Current, STD & Loan Account in the Bank can deposit cheque for collection of fund through clearing house.Transfer:→Precaution at the time of cheque receiving for Clearing, Collection of LBC, and OBC & Name of the account holder same in the cheque & deposit slip.→Amount in The cheque & deposit slip must be same in words & in figure→Date in cheque may be on or before (but not more than six months back) clearing house date.→Bank & Branch name of the cheque, its number & date in the Deposit slip.→Cheque must be signed.→Signature for confirmation of date, amount in words / in figure Cutting & Mutilation of cheque.→Cheque should be crossed (not for bearer cheque).→Account number in the deposit slip must be clear.→Depositor’s signature in the deposit slip.

3.6.7. Return houseReturn House means 2nd house where the representatives of the Bank meet after 3 p.m. to receive and deliver dishonored cheque, which place in the 1st Clearing House. Cheque may be dishonored for any one of the following reasons:→Insufficient fund.→Amount in figure and word differs.→Cheque out of date/ post- dated.→Payment stopped by the drawer.→Payee’s endorsement irregular/ illegible / required.→Drawer’s signature differs / required.→Crossed cheque to be presented through a bank.→Other specific reasons not mentioned above.

The dishonor cheque entry in the Return Register & the party is informed about it. Party’s signature required in the return register to deliver the dishonor cheque. After duration, the return cheque is sent to the party’s mailing address with Return Memo.

Responsibility of the concerned officer for the Clearing Cheque:→Crossing of the cheque.→ (Computer) posting of the cheque.→Clearing seal & proper endorsement of the cheque.→Separation of cheque from deposit slip.→Sorting of cheque 1st bank wise and then on branch wise.→Computer print 1st Clearing House computer validation sheet.

19

→Examine computer validation sheet with the deposit slip to justify the computer posting.→Copy of computer posting in the floppy disk/compact disk.3.6.8. Bills CollectionIn modern banking the mechanism has become complex as far as smooth transaction and safety is concerned. Customer does pay and receive bill from their counterpart as a result of transaction. Commercial bank’s duty is to collect bills on behalf of their customer.

3.6.9. Types of Bills for Collectiona) Outward Bills for Collection (OBC)b) Inward Bills for Collection (IBC)

(a) What is OBC?OBC means Outward Bills for Collection. OBC exists with different branches of different banks outside the local clearinghouse. Normally two types of OBC:1) OBC with different branches of other banks2) OBC with different branches of the same bank

Procedure of OBC:→Entry in the OBC register.→Put OBC number in the cheque.→ “Crossing seal” on the left corner of the cheque & “payees account will be credited on realization” seal on the back of the cheque with signature of the concerned officer.→Dispatch the OBC cheque with forwarding.→Reserve the photocopy of the cheque, carbon copy of the forwarding and deposit slip of the cheque in the OBC file.

(b) Inward bills for collection (IBC)When the banks collect bills as an agent of the collecting branch, the system is known as IBC. In this case the bank will work as an agent of the collection bank. The branch receives a forwarding letter and the bill.

Procedure of IBC:→IBC against OBC: To receive the OBC cheque first we have to give entry in the IBC Register. The IBC number should put on the forwarding of the OBC with date.→Deposit of OBC amount: OBC cheque amount is put into the “sundry deposit sundry Creditors account”, prepare debit & credit vouch of it. If the OBC cheque is honored, send credit advice (IBCA) with signature & advice number of the concern branch for the OBC amount.→If the OBC cheque is dishonored, the concerned branch is informed about it.Again place in the clearing house or send the OBC cheque with Return Memo to the issuing branch according to their information.

3.7. Credit Card Section:Carrying of cash is not so safe in today’s world. There is always a chance of losing or hijacking of cash. On the other hand, the desire to purchase any desired item of one may not be fulfilled for the want of cash at the time of that willingness. To remove these problems, credit card has been introduced which is very popular to face the mentioned problems.

3.7.1. Meaning of Credit Card

20

It is a card (usually plastic) that assures a seller that the person using it has a satisfactory credit rating and that the issuer will see to it that the seller receives payment for the merchandise delivered.NBL is the first local bank, which introduced credit card & MasterCard in Bangladesh in both local and international market in 1997. MasterCard captured 35% of credit card through the world. However present market analysis reflects that a large number of people whose average income ranges in above Tk.l0000 are using the credit card. Credit card division is continuing their all-possible efforts for the participation in the globalize Master Card Program. The number of users of the credit cards is increasing day by day.During the year 2006 the bank has got a profit of Tk.124.25 million from credit card business. NBL also has got the licenses from international brand Visa Card and very soon, it will be launched in the country.

3.7.2. NBL & Credit CardNBL is the first local bank, which introduced credit card & MasterCard in Bangladesh in both local and international market in 1997. MasterCard captured 35% of credit card through the world. However present market analysis reflects that a large number of people whose average income ranges in above Tk.l0000 are using the credit card. Credit card division is continuing their all-possible efforts for the participation in the globalize MasterCard program. The number of users of the credit cards is increasing day by day.During the year 2004 the bank has got a profit of Tk.104.25 million from credit card business. NBL also has got the licenses from international brand Visa Card and very soon, it will be launched in the country.

3.7.3. Types of Credit CardNational Bank Limited offers mainly two type of credit card according to the geographical area. These are Local credit card and International credit card.According to the level of income the local and international credit cards are divided into two categories viz. Gold card and Silver card. These types of credit cards are described below:

(a) Local credit card:Local credit card is valid only in Bangladesh. Out side Bangladesh, the card is invalid.Local card are two types. They are Gold local card and Silver local card. The card limit of gold local card is Tk.50000 to Tk. 100000 and silver local card is below Tk.50000.

(b) International Credit Card:International credit card is valid mainly outside Bangladesh. But for the payment of roaming facilities for Grameen phone, cardholders can use international credit card in Bangladesh. International credit cards are of two types. These are gold international credit card and silver international credit card. The card limit of gold international credit card is $ 2000 to $4000 and silver international credit card below $2000.

3.7.5 Documentation for a credit cardAny person whose monthly income is over 10000 can be a credit card holder of NBL. The requirements of a card are:For Local card:→The fulfillment of the application form.→2 copies of photographs. (If supplementary card is taken then 2 copies of photographs of the nominee).→TIN certificate.

21

→A security. (MSS, SDS or FDR as lien).→Charge documents.

For International card:→The fulfillment of the application form.→2 copies of photographs. (If supplementary card is taken then 2 copies photographs of the nominee).→TIN certificate.→A security. (MSS, SDS or FDR as lien).

3.7.6. Billing of a credit cardNational Bank Limited offers the cardholder 15 to 45 days credit facilities. For the proper billing the bank divided the cardholder into three cycles. These are 0 cycle, 3 cycle and 5cycle. In 0 cycle hill are prepare and send to the cardholder 1st day or every month and last date of payment is 15th day of the month. In 3cycle bill are prepare and send to the cardholder 3rd day of every month and last date of payment is 18th day of the month. In 5cycle bill are prepare and send to the cardholder 5th day of every month and last date of payment is 20th day of the month. The cardholder can pay the bill any branch of the National Bank. If any cardholder fails to pay the bill within the last date then he/she must pay 2% monthly interest and his/her card stop automatically. But if the cardholder pay minimum bill (10% of the bill) then he/she must pay the interest on the balancing amount and can use the card as usual. On the other hand, if the card holder withdraws any cash amount from the ATM booth (maximum limit is 20% of card limit) a monthly charge of 2.5% is to be charged from the date of withdraw. In that case the cardholder will not get the 45 days credit payment facility.

3.8. Loans & Advances SectionThis is the survival unit of the bank. The reason is that until and unless the success of this section, the survival is a big question. This is the main earning unit of the bank. Banks accept deposits from the depositors in condition of providing interest to the depositors in condition of providing interest to them. Now the question is how bank provides interest to their clients. The simple answer is – interest from advances. The bank provides interest to the borrowers because:→To earn interest from borrowers and give depositors the interests get back. The rest are the profit of the bank.→To accelerate economic development.→To meet the interest groups.Credit is a continuous process. Recovery of one credit gives rise to another credit. In this process of revolving funds, bank earns income in the form of interest. A bank can invest its fund in many ways. Bank provides loans and advances to traders, businessmen and industrialists. Moreover, nature of credit may differ in terms of security requirement, disbursement provision, terms and conditions etc. Bank often uses loans and advances as an alternative to one another. But, academically this concept is incorrect. Academically, Advances is the combination such items where loans is a part only. For this credit section of the banks is known as advance section.

3.8.1. Types of AdvancesIt is not possible to discuss all these types of advances in details in this report but an attempt has been made to analyze the basic difference and characteristics of these advances all in the following manner:

22

3.8.1. (A) Overdraft:

Overdrafts are those drawings, which are allowed by the banker in excess of the balance in account up to a specified amount for definite period. It is given to the businessmen to increase their business activities. There are two forms of overdrafts:1.  SOD (Secured Overdraft).2.  Loan General. (LG)Any deposit in the SOD account is treated as repayment of overdraft. The features of SOD are:The interest rate is 14%.The interest starts from the date of first withdrawal.Only businessmen can open this and he has to be a current account holder of the respective branch of NBL.The security that is kept against the SOD loan are generally FDR, SDS, MSS etc.

3.8.1. (B) Cash Credit (CC):It is one type of current account. The difference between them is that current account is intended to be an account with credit balance and the CC is an account for drawing in advance. Operation of cash credit is same as that of overdraft. The purpose of cash credit is to meet working capital needs of traders and industrialists. It is given through the Cash Credit (CC) account.

3.8.1. (C): Inland Bills Purchased (IBP):Bank purchases two types of Inland Bill. Such as:→Clean Bill and→Documentary Bill.

Clean Bill:Clean bill are those that requires no payment for documents cheques, Demand Draft, Telegraphic Transfer, and Mail transfer.

Documentary Bills:Documentary bills are those that require related documents for payments like Bills of Exchange, Railway/ Shipment receipt and invoice etc. This bill is often created in businesses and bank purchases these before their maturity. Thus, purchases of these bills are one kind of credit to these before their maturity. As bank purchases these bills on behalf of the business so it is one kind of credit to those businesses. After maturity, bank presents it to the drawer for encasement.

3.8.1. (D) Employee Loan:For the betterment of its own employees NBL provides loans. The branch managers and executives get this facility. Repayment is adjusted from their monthly salary on an equal monthly installment. 10% of basic salary is contributed by employee in every month. The staffs can also take loan, which is known as Staff Loan against Provident Fund (SPF).The repayment is adjusted from their monthly salary. 10% of basic is also contributed to the PF by the bank.

3.8.1. (E) Consumer Credit Scheme:

23

National Bank’s Consumer Credit Scheme gives a great opportunity to buy household and office items on easy installments. This scheme gives the advantage of part payment to cope with the high price tags of many necessary home and office appliances. To lead a better life NBL provides this credit to consumers to purchase household items as Television, Refrigerator, Personal Computer, Furniture, Car etc. The people with fixed income get this credit. It is a 24 to 48 installment system of 14% interest. The amount allowed to the borrower is 10000/- to 300000/-.

3.8.2. Creation of charges for securing Loans:For the safety of the loan, bank requires security from the borrower so that it can recover the loan by selling security if borrower fails to repay. Creation of charge means making it available as a cover for an advance. The method of charging should be legal, perfect and complete. Securities are charges in order to:→Introduction of the account.→Two photographs of the signatories duly attested by the introducer.→Protection of interest.→Ensuring the recovery of the money lent.→Provision against unexpected change.→Commitment of the borrower.

A brief description about the securities that is kept against the loans is described below:

3.8.2. (A) Primary SecuritySecurity deposited the borrower himself to the loan such as – FDR, Cash, MSS.

3.8.2. (B) Collateral Security (Narrow)1.  Sense – security deposited by a third party to secure the advances for the borrower.2.  Wider sense – any types of security on which the creditor has a personal right of action on the debtor in respect of advance common method of charging security and their nature of security.

3.8.2. (C) LienIt is the right of the banker to hold the debtor’s property until the debt is discharged – generally retained by the bank in its own custody or to the hands of the third party with lien marked. The third party cannot discharge it without the permission of the bank. In case of need bank needs permission of the court to sell the property.

3.8.2 (D) AssignmentBorrower transfers the right of property or debt to the bank. Life Insurance Policy, supply bills, book debt of the borrower can be assigned.

3.8.2. (E) PledgeIt is one kind of lien but the bank enjoys more rights on it. In this case, physical transfer of the goods is must to the bank. Bank can sell the property without the intervention of the court in case of default on loan.

3.8.2. (F) MortgageMortgage is the transfer of special movable property – like land, building, plant etc. Most common type of mortgage is legal mortgage in which ownership is transferred to the bank by registration of the mortgage deed.

24

Another method called equitable mortgage is also used in bank for creation of charges.Registration is not required. In both the cases, the mortgaged property is retained in hand of the property.

3.8.3 Principles of sound lending:In order to secure a balance between liquidity Profitability, and security, NBL following principles of sound lending:

3.8.3. (A) LiquidityWhile lending, adequate care is taken to ensure the liquidity of the lien item. In this case, NBL choose such securities, which possess such liquidity.

3.8.3. (B) SafetyNational Bank exercises the lending function only it is safe and the risk factor is adequately mitigated and covered. Safety depends upon the security offered by the borrower.

3.8.3. (C) DiversityIn order to minimize the risk, National Bank invests its fund in different industries of different industries situated in different regions of the country.

3.8.3. (D) YieldFrom the commercial point of view, National Bank considers sufficient yield of return while financing a project.

3.8.3 (E) Productive PurposeNational Bank exercises its lending function only on productive purpose.

3.8.3 (F) National or Social InterestNational Bank also considers national aspect of any project while financing. They take utmost care so that the project cannot be determined to the society as well as to the nation.

3.8.4. Selection of Borrower:In lending, the most important step is the selection of the borrower. Due, to the asymmetric information and moral hazard, banks have to suffer a lot due to the classified loans and advances, which weakens the financial soundness of the bank. If the selection of the borrower is correct, that is the borrower is a good character, capital and capacity or of reliability, resourceful and responsible the bank can easily get the return from them.This point of view, NBL follows the following procedures:

3.8.4. (A) Studying past track recordAfter getting an application for a loan the past record of the applicant is carefully studied. Generally such studies includes –→Account balances and past transactions→Credit report from other banks→Information of the industry by studying market feasibility→Financial statements (balance sheet, cash flow statement, and income statement). If the borrower is a sole proprietor then the single entry accounting treatment is converted into double entry system.→If the amount is more then TK. 10 lac then report from credit information bureau (CIB) of Bangladesh Bank is collected.

25

3.8.4(B) Borrower analysisBorrower analysis is based on 5-c’s (character, capital, capacity, collateral, creditworthiness) and 3-r (responsibility, reliability and resourcefulness). It follows that the bank forms a rational judgment about the integrity of the borrower which should be undoubted.

3.8.4. (C) Credit approval procedureAfter receiving the application from the client, National Bank Limited prepares a Credit Line Proposal (CLP) and forwards the same to the Head Office to place before Head Office Credit Committee (HOCC) for approval. It includes→Request for credit limit of customer.→Project profile/ profile of business.→Copy of trade license duty attested.→Copy of T I N certificate.→Certificate copy of Memorandum & Articles of Association, certificate of incorporation, certificate of commencement of business, Resolution of the Board, Partnership Deed (where applicable).→3 years balance sheet and profit & loss account.→Personal net worth statement of the owner/ directors/partners etc.→Valuation certificate of the collateral security in bank’s form with photograph of the security.→CIB enquiry form duly filled in (for proposal of above 10 lac).→Credit report from other banks.→Stock report duly verified.→Indent/ Performa invoice/Quotation.→Statement of accounts.

4.8.5. Documentation:Documentation can be described as the process of technique of obtaining the relevant documents. In spite of the fact, that banker leads credit to a borrower after inquiring the character, capital, capacity, collateral, creditworthiness of the borrower. NBL obtains proper documents executed from the borrower, and he must obtain proper documents executed from the borrower to protect him against willful defaults. Documentation contains the precise terms of granting loans and thereby serve as important evidence in the law courts if the circumstances so desire. Charge documents as required by the different types of advances are mentioned below:

3.8.5(A) Loan:→Letter of arrangement.→Letter of disbursement.→Letter of partnership (firm) or Board of resolution (Limited companies).→Letter of pledge.→Letter of hypothecation.→Letter of lien and ownership.→Letter of credit for packing credit.→Letter of lien. (in case advance against FDR).→Letter of lien and transfer authority.→Legal documents for mortgage of property.→Copy of sanction letter mentioning detail of terms and condition duly acknowledge by the borrower.

26

→Trust receipt.→D P Note.3.8.5 (B) Overdraft→Letter of partnership.→Letter of arrangement.→Letter of continuity.→Letter of lien.→Letter of lien and ownership/share transfer form (in case of advance against share).→Letter of lien and transfer authority.→Legal documents for mortgage of property.→D P Note.

3.8.5 (C) Cash Credit:→Letter of partnership (partnership firm) or Board of resolution (in case of Limited company).→Letter of arrangement.→Letter of continuity.→Letter of hypothecation. (In case of CC).→Legal documents for mortgage of property.→Letter of pledge or arrangement of pledge.→D P note.

3.8.5(D) Bills Purchased:→Letter of partnership (partnership firm) or Board of resolution (in case of limited company).→Letter of arrangement.→Letter of acceptance, where it calls for acceptance by the drawee.→Letter of hypothetical of bill.

3.9. Western Union Money Transfer Section:National bank Ltd. signed an agreement with the Western Union Financial services, USA in 1993. Millions of people from different parts of the world are sending money with confidence to their near and dear through the western union has the most modern technology for remitting money within quiets possible time from any part of the world through their more than 170000 representatives in 190 countries and regions has established a unique money transfer system with western union. Through an online computer system units can be instantly of the world. 56.17 million dollar was remitted to this bank through this organization during the year 2003.NBL brought a substantial amount of foreign exchanges in to the country through the western union in 2003, which is 44% higher than that of 2002 The western union is a globally reputed name in money transfer services and data exchange forever 150 years. Western union has continued its tradition of possessing the latest technology and handling wide scale remittances.Payment of remittance by expatriate Bangladeshis through the western union is being made at all branches of NBL. These branches are connected with the on-line computer system of the western union.The special feature of services is as follows:→Fast: Remits money in minutes.→Safe: World-class security system.→Easy: Over 2, 00,000 agents locations across 200 Countries and territories worldwide.→Reliable: Trusted by millions for over 150 years.

27

3.10. Accounts section:Accounts Department is called as the nerve Center of the bank. In banking business, transactions are done every day and these transactions are to be recorded properly and systematically as the banks deal with the depositors’ money. Improper recording of transactions will lead to the mismatch in the debit side and in the credit side. To avoid these mishaps, the bank provides a separate department; whose function is to check the mistakes in passing vouchers or wrong entries or fraud of forgery. This department is called as Accounts Department. If any discrepancy arises regarding any transaction this department report to the concerned department.Besides these, the branch has to prepare some internal statements as well as some statutory statements, which are to be submitted to the Central Bank and the Head Office.This department prepares all these statements.

Workings of this department:→Introduction of the account.→Two photographs of the signatories duly attested by the introducer.→Recording the transactions in the cash book.→Recording the transactions in general and subsidiary ledger.→Preparing the daily position of the branch comprising of deposit and cash.→Preparingthe daily Statement of Affairs showing all the assets and liability of the branch as per General Ledger and Subsidiary Ledger separately.→Making payment of all the expenses of the branch.→Recording inter branch fund transfer and providing accounting treatment in this regard.→Preparing the monthly salary statements for the employees.→Preparing the weekly position for the branch which is sent to the Head Office to maintain Cash Reserve Requirement (C.R.R)→Preparingthe monthly position for the branch which is sent to the Head Office to maintain Statutory Liquidity Requirement (S.L.R)→Make charges for different types of duties.→Preparing the budget for the branch by fixing the target regarding profit and deposit so as to take necessary steps to generate and mobilize deposit.→Checking of Transaction List.→Recording of the vouchers in the Voucher Register.→Packing of the correct vouchers according to the debit voucher and the creditvoucher.

28