-
7/29/2019 Part One2003
1/15
Date: 3rd February, 2011
ToShahriyar AnamHeadDept. of Business AdministrationThe
University of Asia Pacific
SUB: Submission of Internship Report on BASIC Bank Limited.
Dear Sir,
I am highly satisfied to submit my report on performance of
General Banking and
Accounting procedures of BASIC Bank Limited. For preparing this
report I tried
my level best to accumulate relevant and up grated information
from all available
sources. In this report I endeavored to represent analysis of
General Banking
activities and Accounting procedures done by the Bank.
In preparing this report, I tried my best to make it a complete
one and sincerely look
forward to any possible correction.
I am very much glad for your and you also have given me the
opportunity to
prepare this report. I hope that this report will meet the
standards of your judgments.
Faithfully yours,
Md.nazmul Hossain
Reg. 06202007Roll. 07Department of Business Administration
i.
-
7/29/2019 Part One2003
2/15
PREFACE:
Practical knowledge has no alternative especially for Business
student. EveryBusiness student should get a chance to acquire
practical knowledge through
Internship Program. It helps every students to provide an on the
job exposure and
opportunity for transaction of theoretical conception in to real
life situation. The
Internship Program is compulsory for BBA final year students of
the department of
Business Administration, University of Asia Pacific (UAP). The
Internship Program
is a part of the BBA Degree, so like every year the department
has arranged this
program in various named places (like Banks, companies and
institutions) in order
to acquire knowledge in that respective field. Throw that time
allowed me by the
department for working in BASIC Bank Limited. Yet I tried my
level best to
achieve those light objectives within a period of time.
I chose the topic on General Banking Transaction and Accounting
Procedures of BASIC
Bank Limited.
BASIC Bank Limited is commerce bank, which is committed to run
all its
activities as per government rules and regulations. I learnt in
here a little about their
performance of General Banking transaction and accounting
procedures.
i.
-
7/29/2019 Part One2003
3/15
ACKNOWLEDGEMENT:
First of all I would like to express my gratitude to omnipotent
and almighty Allah,
whose invisible guidance helped me to complete this report.
Although, time was
very limited for getting the sufficient knowledge about all of
banking service, but
the short experience that I gathered as an internee, in BASIC
Bank Limited as an
asset for all the time to come in my life.
I am very much grateful to the authority of BASIC Bank Limited
to assign me as aninternee in this reputed bank and have the
opportunity to learn theoretical as well as
practical knowledge related to general banking system and
complete such and
ambitious study for my internship program as well as for
preparation of this report.
I am deeply grateful to all concerned persons who provide
valuable guidance,
suggestions and advices in collecting information, analyzing and
preparing the
report. I am particularly indebted to them whose efforts and
cordial cooperation
made the report possible.
I am grateful to the Department of Business Administration, UAP
for providing me suchopportunity to come closer to real
situation.
Finally, I want to express my deep gratitude to my parent and
other family members
and also remember my friends whose enormous helps assist me to
complete my
report.
i.
-
7/29/2019 Part One2003
4/15
Executive Summary:
This internship repot has been prepared to fulfill the
requirement for getting BBA
degree. As a part of my course, it is mandatory to get involved
with an organization
for a period of time (3 month) to acquire the practical
knowledge.
The report covers organizational aspects of BASIC Bank and a
project titled
Performance of General Banking Transaction and Accounting
Procedures of
BASIC Bank Limited.
Its important functions of BASIC Bank Limited are to divide into
three
departments; such departments are General Banking, Foreign
Exchange and
Advance or loan. From these departments I tried to express the
overview of General
Banking department.
In the organization part, I have focused on brief acquaintance
of BASIC Bank
Limited, its objectives, activities, functions and operations
different departments of
Head Office. I also tried to present updated numerical data of
different aspects
related to discussion.
In the project part I was required to analyze the overall
General Banking, which
content to Accounts open, Money transfer, Clearing House. I also
tried to touch
every matters of General Banking.
Hope it will help the readers to have to have a distinct picture
of the whole projectwork. Any kind of criticism, errors, or print
mistake are welcome for inform me for
betterment of the project.
i.
-
7/29/2019 Part One2003
5/15
INTRODUCTION
Origin of the Report
Placement or internship program is an indispensable part of BBA
(Bachelor of BusinessAdministration) program, STAMFORD UNIVERSITY
that bridge the gap between thetheoretical knowledge and practical
situation. I was assigned to the AB bank at karwanbazar branch
.Dhaka to take the real banking experience in order to reinforce
knowledgeacquired so far from the BBA program. In this internship
program, each student selects aproject for study, completes the
study and prepares a report with recommendation forsolution of the
problem. This report is tentatively prepared to complete my BBA
programand assigned by PROF RIMA PARVIN.
1.1 Objective of the report
The main objectives of the study are:
To find out the actual banking activities happening in a private
commercial bank inBangladesh.
To fulfill the requirement for the completion of BBA
program.
The Secondary objectives of this report are:
To know the operation of karwan bazar Branch of AB Bank Ltd.
To describe the customer service process of AB Bank Limited.
To analyze the barriers faced by the ABBL in providing service
to their customers.
To suggest a supportive role in the progress of banking system
in financial sector.
To know about the objectives and planning of ABBL.
To know how the branches are efficiently controlled.
To identify whether all process are perfectly and effectively
practiced or not.
1.3 Methodology of the Study
Different data and information are required to meet the goal of
this report. Those data andinformation were collected from various
sources, such as, primary and secondary which isshown below:
Primary Sources of Data:
Personal observation.
Face to face conversation with the officers.
Face to face conversation with the client.
Working at different desks of the bank.
i.
-
7/29/2019 Part One2003
6/15
Secondary Sources of Data:
File study.
Annual report of AB Bank Ltd.
Statement of affairs.
Bank Rate sheet.
Internet.
Progress report of the Bank.
Bangladesh Bureau of Statistics report.
1.4 Scope of the Study
AB Bank Limited is now well growing and its operating 77
branches in different parts ofBangladesh. The scope of the study
will be limited to the organizational setup, functionand operation
of the ABBL in the Bangladesh. This report mainly encompasses
theperformance of AB Bank Limited in comparison to the overall
banking system inBangladesh. For the purpose of my internship
program, I was assigned at the karwan BazarBranch and this provided
me the way to get myself familiarized with banking environmentfor
the first time indeed. I have an opportunity to gather experience
by working in differentdepartments of the Branch.
1.5 Limitations of the Study
During the study, I have faced the following limitations:
Due to some legal obligation and business secrecy bank was
reluctant to providedata. For this reason, the study limits only on
the available published data andcertain degree of formal and
informal interview.
The bankers are very busy with their jobs, which lead a little
time to consult withthem.
Category wise export, import and guarantee business, amount and
percentage of
classified loan originated from the international trade are
missing in the report fortheir restriction.
i.
-
7/29/2019 Part One2003
7/15
i.
-
7/29/2019 Part One2003
8/15
Literature Review
2.1 What Is Bank?The functional definition of Bank is that "it
is a financial institution which accepts moneyfrom its customers as
deposits and gives money as loan to the borrowers." According to
a
prominent economist R. S. Sayers, a bank is an institution whose
debts are widelyaccepted in settlement of other peoples debt to
each other." Another economist C. Crossdefined, a bank is a
financial intermediary - a dealer in loans and debts."
2.2 Development of Modern Banking InstitutionWith the gradual
development of the banking system throughout the world, the
organizedand modern banking institutions came into existence names
of some of which are givenbelow:
Year of
establishment Name of bank Special feature
1171 The bank of VeniceFirst organized bank of theworld.
1178 The bank of son GeorgioThe discoverer of AmericaMr.
Columbus was the firstcustomer of this bank.
1584 The Banco di Rialto
First public bank started inVenice which did businessboth in the
deposit andexchange breaches.
1556The bank of Sweden
It is the state bank ofSweden. This bank has thecredit of having
inventedbank notes.
1656 The Risk bank of Sweden
1694 The bank of England
1800 The bank of FranceThis is central bank ofFrance & and
it wasestablished by Napoleon.
1834 London Joint Stock Bank UnionBank of England LondonCountry
Bank
2.3 Banking Sector in Bangladesh
i.
-
7/29/2019 Part One2003
9/15
At the moment financial sector reform programs are underway.
Private Banks with fewexceptions are functioning creditably.
Uttara, Pubali and Rupali Banks which wereformally owned by the GOB
were privatized.
Bangladesh pursues a liberal market economy. Bangladesh Bank is
the central bank of the
country responsible for promoting healthy growth and development
of the bankingsystem. Banks, both in the private and public
sectors, are operating freely and contributingto the economy.
Foreign banks like Standard Chartered Bank, HSBC, Citi NA, Bank
ofCeylon etc. function in Bangladesh through their branches.
There are other specialized financial institutions like the
Bangladesh Shilpa Bank(Industrial Bank), Bangladesh Shilpa Rin
Sangstha (Industrial credit organization). Thosetwo Bank are
amalgamated in the name of Bangladesh Development Bank,
Krishi(Agriculture) Bank, House Building Finance Corporation,
Grameen (Rural) Bank andseveral cooperative banks.
During the last three years, a number of steps have been taken
to strengthen the country'sbanking system. These include
improvement of the regulatory environment. Enforcementof loan
classification guidelines and recapitalization of nationalized
commercial banks.Over the past two years, there has been a massive
infusion of taka 32,000 million in theNCBs in the shape of
government bonds to make up for capital and
provisioningshortfalls.
The commercial banks are now diversifying and strengthening
their portfolio. They haveincreased term lending. Up to April 1994
they have sanctioned term loans totaling taka10,260 million.
Disbursement agricultural loans stood at taka 9,660 million 31 %
increaseover the same period in 1993. NCBs have introduced loan
programmers in off-farm and
agro-based activities. NCBs, BSB and BSR have been able to
rehabilitate 471 sickindustrial units which have created 21,000 new
jobs.
The government is keen to correct and remedy failures and
imperfection in the financialmarkets. A small credit guarantee
scheme has been introduced, to assist newentrepreneurs who can
receive loan of taka 2.5 million without any collateral. To
enlargethe activities of Grameen Bank, which serves the poor,
particularly the women in therural areas, the government has
provided guarantee against loans amounting to taka 4,650million in
1993-94 in addition to taka 1000 million provided directly by the
BangladeshBank. In the fiscal year 1994-95 the government has
already committed to Grameen
Bank to provide loan guarantee for an additional amount of taka
3850 million.
The reforms of financial sector and trade liberalization are
being complemented byappropriate forex regime. An active exchange
rate policy to maintain the competitivenessof the economy is being
followed in the backdrop of the Uruguay Round MultilateralTrade
Agreements and particularly, the gradual merger of Multi-fiber
arrangement intothe GATT the exchange rate will be closely
monitored. Taka has been made convertible
i.
-
7/29/2019 Part One2003
10/15
on all international current transactions. Company laws have
been reformed for boostingprivate investment.
Bangladesh has accepted the obligations of Article VIII of IMF
Articles of Agreementwhich means removal of all restrictions on
making payments and transfers for current
international transactions. By accepting these obligations,
Bangladesh has given a clearsignal to the international community
that it would pursue sound economic policies, andthereby create a
congenial climate for investment.
2.4 The Banking SystemThe banking system at independence
consisted of two branch offices of the former StateBank of Pakistan
and seventeen large commercial banks, two of which were
controlledby Bangladeshi interests and three by foreigners other
than West Pakistanis. There were
fourteen smaller commercial banks. Virtually all banking
services were concentrated inurban areas. The newly independent
government immediately designated the Dhakabranch of the State Bank
of Pakistan as the central bank and renamed it the BangladeshBank.
The bank was responsible for regulating currency, controlling
credit and monetarypolicy, and administering exchange control and
the official foreign exchange reserves.The Bangladesh government
initially nationalized the entire domestic banking systemand
proceeded to reorganize and rename the various banks. Foreign-owned
banks werepermitted to continue doing business in Bangladesh. The
insurance business was alsonationalized and became a source of
potential investment funds. Cooperative creditsystems and postal
savings offices handled service to small individual and rural
accounts.The new banking system succeeded in establishing
reasonably efficient procedures for
managing credit and foreign exchange. The primary function of
the credit systemthroughout the 1970s was to finance trade and the
public sector, which together absorbed75 percent of total
advances.
The government's encouragement during the late 1970s and early
1980s of agriculturaldevelopment and private industry brought
changes in lending strategies. Managed by theBangladesh Krishi
Bank, a specialized agricultural banking institution, lending to
farmersand fishermen dramatically expanded. The number of rural
bank branches doubledbetween 1977 and 1985, to more than 3,330.
Denationalization and private industrialgrowth led the Bangladesh
Bank and the World Bank to focus their lending on theemerging
private manufacturing sector. Scheduled bank advances to private
agriculture,
as a percentage of sectoral GDP, rose from 2 percent in FY 1979
to 11 percent in FY1987, while advances to private manufacturing
rose from 13 percent to 53 percent.
The transformation of finance priorities has brought with it
problems in administration.No sound project-appraisal system was in
place to identify viable borrowers and projects.Lending
institutions did not have adequate autonomy to choose borrowers and
projectsand were often instructed by the political authorities. In
addition, the incentive system forthe banks stressed disbursements
rather than recoveries, and the accounting and debt
i.
-
7/29/2019 Part One2003
11/15
collection systems were inadequate to deal with the problems of
loan recovery. It becamemore common for borrowers to default on
loans than to repay them; the lending systemwas simply disbursing
grant assistance to private individuals who qualified for loansmore
for political than for economic reasons. The rate of recovery on
agricultural loanswas only 27 percent in FY 1986, and the rate on
industrial loans was even worse. As a
result of this poor showing, major donors applied pressure to
induce the government andbanks to take firmer action to strengthen
internal bank management and credit discipline.As a consequence,
recovery rates began to improve in 1987. The National Commissionon
Money, Credit, and Banking recommended broad structural changes in
Bangladesh'ssystem of financial intermediation early in 1987, many
of which were built into a three-year compensatory financing
facility signed by Bangladesh with the IMF in February1987.
One major exception to the management problems of Bangladeshi
banks was theGrameen Bank, begun as a government project in 1976
and established in 1983 as anindependent bank. In the late 1980s,
the bank continued to provide financial resources to
the poor on reasonable terms and to generate productive
self-employment withoutexternal assistance. Its customers were
landless persons who took small loans for alltypes of economic
activities, including housing. About 70 percent of the borrowers
werewomen, who were otherwise not much represented in institutional
finance. Collectiverural enterprises also could borrow from the
Grameen Bank for investments in tube wells,rice and oil mills, and
power looms and for leasing land for joint cultivation. The
averageloan by the Grameen Bank in the mid-1980s was around Tk2,000
(US$65), and themaximum was just Tk18,000 (for construction of a
tin-roof house). Repayment termswere 4 percent for rural housing
and 8.5 percent for normal lending operations.
The Grameen Bank extended collateral-free loans to 200,000
landless people in its first10 years. Most of its customers had
never dealt with formal lending institutions before.The most
remarkable accomplishment was the phenomenal recovery rate; amid
theprevailing pattern of bad debts throughout the Bangladeshi
banking system, only 4percent of Grameen Bank loans were overdue.
The bank had from the outset applied aspecialized system of
intensive credit supervision that set it apart from others. Its
success,though still on a rather small scale, provided hope that it
could continue to grow and thatit could be replicated or adapted to
other development-related priorities. The GrameenBank was expanding
rapidly, planning to have 500 branches throughout the country bythe
late 1980s.
Beginning in late 1985, the government pursued a tight monetary
policy aimed at limitingthe growth of domestic private credit and
government borrowing from the bankingsystem. The policy was largely
successful in reducing the growth of the money supplyand total
domestic credit. Net credit to the government actually declined in
FY 1986. Theproblem of credit recovery remained a threat to
monetary stability, responsible for seriousresource misallocation
and harsh inequities. Although the government had beguneffective
measures to improve financial discipline, the draconian contraction
of creditavailability contained the risk of inadvertently
discouraging new economic activity.
i.
-
7/29/2019 Part One2003
12/15
Foreign exchange reserves at the end of FY 1986 were US$476
million, equivalent toslightly more than 2 months worth of imports.
This represented a 20-percent increase ofreserves over the previous
year, largely the result of higher remittances by
Bangladeshiworkers abroad. The country also reduced imports by
about 10 percent to US$2.4 billion.
Because of Bangladesh's status as a least developed country
receiving confessional loans,private creditors accounted for only
about 6 percent of outstanding public debt. Theexternal public debt
was US$6.4 billion, and annual debt service payments were
US$467million at the end of FY 1997.
2.5 International BanksThe World Bank has taken the lead in
addressing some of the most deep-seated structuralconstraints in
Bangladesh's economy by providing productive employment for
thosewithout assets, promoting economic opportunities for women,
and addressing the social
and economic inadequacies of education, health, nutrition, and
population programs.Among aid projects were the Irrigation
Management Programme, which supports drainageand flood control as
well as the introduction of pumps and drills; support for
maintenanceof the nation's more than 43,000 primary schools
(including repairs to existing buildings,additions to accommodate
larger numbers of pupils, and construction of new schoolswhere
needed); and the 500,000-ton Ashuganj fertilizer complex, utilizing
domestic naturalgas, which came on stream in 1981. The World Bank
has made loans to Bangladesh onlyfrom its "soft window," the
International Development Association. These interest-freeloans
provide for a 10-year grace period before repayment of principal
begins and a 40-year repayment schedule, with the addition of a
service charge of 1.5 percent.
The Asian Development Bank was the second largest donor, after
the International
Development Association, to Bangladesh's development in the
1980s. As of the end of1985, the Bank had approved 66 loans
totaling US$1.8 billion. In 1985 alone, the bankapproved loans of
US$212.3 million for 6 new projects (down from US$306.8 million
for4 projects the year before). In addition, the bank provided
local currency financing ofUS$59.8 million for 3 projects, co
financing of US$10.5 million to projects with otherdonors, and a
program loan of US$39 million for provision of fertilizer. About
half of theAsian Development Bank's financing has gone to
agriculture and agro-industry. The 1985package, for example,
included a livestock development project intended to increase
foodproduction and improve rural incomes through expansion of
veterinary services andlivestock nutrition. In 1987 the Asian
Development Bank approved a technical assistancegrant (co financed
by the Norwegian government) to explore the feasibility of
growing
rubber trees commercially in Bangladesh. The Asian Development
Bank also has beenactive in the development of natural gas. In 1987
the bank approved a US$74 million loanfor construction and
extension of natural gas transmission and distribution pipelines to
5districts in eastern Bangladesh. The loan was intended to cover 71
percent of project costs,including all of the foreign exchange
requirements for the project. The bank has alsosupported
transportation projects (development and improvement of feeder
roads betweenlocal markets and primary roads, inland waterways, and
railroads) and social welfareschemes for population control,
health, and education.
i.
-
7/29/2019 Part One2003
13/15
2.6 Banking Companies Ordinance
The banking companies ordinance was promulgated on the 7th June,
1962. This has been
adopted in Bangladesh and is applicable to the banking companies
only. Nothing of thisordinance shall apply to a co-operative bank
registered under the co-operative Securitiesact.
Main forms of business of Banking Companies:
Borrowing, raising or taking up money.
The lending or advancing of money either upon or without
security.
Dealing in securities and investment.
Other business.
2.7 Negotiable Instruments ActThe negotiable instrument act,
1881 is the legislative enactment of the law relating tothree
classes of negotiable instruments namely: Promissory Notes, Bill of
exchange andCheque, which are in common bank use in the monetary
instructions. It came into forceon 1st March, 1882.
The law relating to negotiable instruments is not the law of our
country or of one nation.It is the law of the bank world-wide in
general. It consist of "certain principles of equityusages of
trade, which general convenience and commonsense of justice had
established
to regulate the dealing in merchants and marines in all the
commercial countries of thecivilized world.
2.8 Banking Systems In Bangladesh
The banking system in the world is mainly two types,such as Unit
banking and Branch banking or
British banking. In unit banking system, there willnot be more
than one branch of a bank. Such types ofbanks are mostly available
in the different states of
USA. In the branch banking or British bankingsystem, there will
be a few banks with their head
i.
-
7/29/2019 Part One2003
14/15
offices in the city, which have a network of branchesthroughout
the country. In Bangladesh the Branch or
British banking system exists.
2.9 Categories of BanksIn our country, there are three types
banks exist. Such as:
2.9.1 Central Bank
Bangladesh bank is the central bank of Bangladesh. It was
formally come in to being by atemporary presidential order. After
the liberation of Bangladesh, the else while deputy
governors office of the state Bank of Pakistan in Dhaka
entrusted with responsibilities ofperforming the rule of
full-fledged central on 16th December, 1971.The Bangladesh
bankorder 1972 and banking companies ordinance govern the power of
a functions ofBangladesh bank.
2.9.2 Commercial Banks
Nationalized Commercial Banks:
Now, we have three Nationalized Commercial Bank in Bangladesh.
The Nationalized
Commercial Banks are
Sonali bank,
Agrani bank.
Janata bank
Private Commercial Bank:
There are a lot of private commercial banks in Bangladesh. Such
as
Rupali bank Ltd.,
Uttara Bank Ltd.,
AB Bank Ltd.,
Dhaka bank ltd.,
National Bank Ltd.,
National Credit and CommerceBank Ltd.,
IFIC Bank Ltd.,
Dutch- Bangladesh Bank Ltd.,
Social Investment bank Ltd,
BASIC Bank,
Eastern Bank Ltd.,
EXIM Bank Ltd.,
Premier Bank Ltd.,
Southeast Bank Ltd.,
i.
-
7/29/2019 Part One2003
15/15
Prime Bank Ltd.,
Islami Bank,
The City Bank Ltd.,
Mutual Trust Bank Ltd.,
First Security Bank Ltd.,
One Bank Ltd.,
Bank Asia etc.
2.9.3 Specialized Banks/ Development Banks
In Bangladesh some specialized development banks are working for
our economicdevelopment.The banks are
World Bank,
Asian development Bank,
Bangladesh Shilpo Bank,
and other Financial Institutions.
i.
